This looks bad. Real bad. But is it? Apple, one of the newer players in the world of online digital music streaming. Are reportedly coming to the end of long licensing deals with record labels for both Apple Music and iTunes. With sources at Bloomberg saying that these are done by June. The big three labels are Universal Music Group, Sony Music Entertainment and Warner Music Group. All be in negotiations with the streaming services over how much they pay. If you want to see a very impressive visual display of what the streaming services pay ‘artists’ per stream, click here.
The royalty rate was quite high for Apple Music at 58%. Giving artists a good payout on the amount of streams that they got on songs and giving Apple Music a much needed boost when they started. Spotify is currently sitting at around 52% but currently attracts way more monthly active users than Apple Music has subscribers. 53 million paid subscribers compared to Apple’s 27. With Spotify going from strength to strength. It is believed that Apple will try to achieve a similar deal with record labels and lower the rate that they pay out, keeping them competitive. Apple do make a huge amount of money every year and Spotify are reportedly losing money, yet to make a profit.
In return for ensuring that there was a delay option on particular albums (assuming that means new and hot releases) Universal and Merlin agreed to lower rates for Spotify. What would Apple have to offer in order to get a similar cut? It is assumed that they would promise increased subscription rates and possibly a similar special release window for new albums, although Apple Music (outside of the three month trial) doesn’t have a freemium level like Spotify does. Streaming continues to be a huge and complicated issue, but these two companies are certainly paving the way in terms of how things should and could be done.