Apple is looking to lower music labels' revenue cut for Apple Music


According to Bloomberg, that cited anonymous sources, Apple is looking to negotiate lower revenue cuts for music labels on the Apple Music platform. Reportedly, Apple's deals with the music industry end in the end of June, and if the two parties can't agree on new terms, they will automatically be renewed.

According to Bloomberg's sources, the talks will cover both the Apple Music streaming service and iTunes, Apple's digital-download music store. The talks are meant to bring Apple Music's rates closer to those of its main competitor – Spotify. The Finnish company recently lowered the cut for music labels from 55% to 52%, under the condition that user subscriptions will continue to grow.

For comparison, Apple currently gives music labels a cut of about 58%. This is more than any other music-streaming service on the market. Reportedly, these terms were meant to calm down labels who were concerned that Apple Music will drive revenue away from iTunes. These fears proved to be irrational, however. Digital music sales have indeed dropped in recent years, however they still account for 24% of music sales in the US.

According to Bloomberg, music labels are open to discussing their revenue cut, assuming Apple makes sure to promote iTunes in areas where streaming is not a viable option, be it due to slow mobile data speeds, or consumers that prefer to buy their music rather than stream it. Similar to the recent deal with Spotify, labels will also demand guaranteed subscription growth.

source: Bloomberg via BusinessInsider

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