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Apple is renegotiating Apple Music deals, asking record labels to take lower revenue cuts

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It’s been about two years since Apple Music made its debut to take on widely known music streaming giants, like Soundcloud and Spotify. The record deals that Cupertino signed back then are soon expiring and Apple is currently caught amid re-negotiation for the same.

But, there’s a noticeable change that Apple is trying to induce this time around and it could potentially impact its relationship with record labels. This is, however, debatable and depends on how open they are to change in their streaming-based revenue stream. It is presently being reported that Apple is asking the record labels to reduce the revenue cuts for streaming on Apple Music. The said development was first reported by Bloomberg.

According to sources privy to the arrangements, the Cupertino giant is now renegotiating licensing deals for both Apple Music and iTunes with three prominent record labels. Their existing deals will expire by the end of this month but one can expect them to be extended until an agreement on the new terms isn’t achieved. As mentioned in the report,

The talks cover Apple’s agreements for Apple Music, the two-year-old streaming service offering millions of songs on demand, and iTunes, the store where people can buy individual songs or albums.

This means the music from your favorite artists won’t vanish from the platform, thus, an extension to maintain music and revenue streams alike. This is because Apple has maintained more cordial terms with record labels as opposed to other streaming platforms such as Spotify and YouTube. The two have rarely made their regressions public.

The new licensing deals, which are priced lower, are aimed at revising the ‘overall relationship’ with the record labels. Apple Music is presently one of the highest paying music streaming platforms, where record labels receive 58 percent of revenue.

But as one of the sources suggest, Apple is now looking to further turn up the competition, as well as revenue, by taking the royalty payouts closer to what its arch-nemesis Spotify. The latter is offering the record labels only 52 percent of the revenue from its 50+ million subscribers. This is down from the previous 55 percent, which could be the ballpark Apple Music is trying to achieve.

The record labels are expected to eventually accept the licensing deal, which is still better than Spotify’s, as they’re now aware of the success of these streaming platforms. The said industry grew by close to 6 percent worldwide, thanks to paid streaming services like Apple Music and Spotify — the two prominent examples.

A hands-on guy fascinated by new apps, technologies and enterprise products.

anmol@thetechportal.in


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