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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6 Comments

1. L0n3n1nja

Posts: 1581; Member since: Jul 12, 2016

Digital music has dropped to only 24% of music sales? Does that mean most people are still buying CDs? I made the switch to MP3 before the original iPhone was released, back before Android was even a thing. What's next? VHS makes a come back?

2. gehrig

Posts: 423; Member since: Apr 17, 2014

They mean that the PURCHASE of digital music has dropped to 24%. STREAMING is still huge.

5. mixedfish

Posts: 1563; Member since: Nov 17, 2013

MP3 has been declared obsolete by the founders last month, but CDs haven't. So really which one is truly obsolete?

6. ibend

Posts: 6747; Member since: Sep 30, 2014

why not? I still buy CDs, just because I want to support my favorite artist (or his/her music label) more directly.. and they also give some nice photoalbum/photobook/poster and other nice collectibles for every CD purchase.. (btw, I never open those CDs because I got no reason doing so, lol...)

3. NarutoKage14

Posts: 1339; Member since: Aug 31, 2016

The music industry is as greedy as Apple.

4. lyndon420

Posts: 6861; Member since: Jul 11, 2012

You're absolutely right...no one should be paid more than 50% of their worth. The music industry would be nothing without musicians...but who cares right?! Maybe we should all donate 50% of what we make to apple...because well...they're really hurting financially.

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