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News June 22, 2017

Apple wants to pay less to record labels

Apple wants to pay less to record labels

When Spotify negotiated a reduced royalty rate with Universal Music Group in April – believed to shift from 55% to 52% – Apple was watching closely.

According to Bloomberg, Apple is seeking similar treatment to Spotify to bring its label revenue share rate down from 58% to a number more in line with the Spotify agreement.

The Cupertino tech giant may just get its wish, but it must be willing to adhere to the same compromise as Spotify.

Universal has reportedly set Spotify paid-subscriber growth targets in return for the revenue share dip. And if the streaming giant doesn’t reach them, UMG has the option to either postpone the agreement plans, or give them up entirely.

Apple’s long-term licensing deals with the labels are due to expire at the end of this month. According to Bloomberg, UMG is open to offering Apple a similar deal but is expected to add in an extra clause regarding continued promotion of iTunes in key download markets.

Regardless, Spotify still has the streaming market cornered. It now attracts over 140m monthly active users, and around 53m paying subscribers. Meanwhile, Apple has more than 27m paying subscribers, up from 20 million subscribers in December.

This article originally appeared on The Industry Observer, which is now part of The Music Network.



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