Apple Reportedly In Talks with Majors for Cheaper Music, Looks to Lower Beats Music Pricing
Apple is looking to pull the same trick it did ten years ago around the launch of iTunes -- convincing the major labels to agree to something they may be wary of.
Apple is looking to pull the same trick it did ten years ago around the launch of iTunes — convincing the major labels to agree to something they may be wary of. The tech company is, according to Re/code, negotiating with majors to lower their licensing rates (as well as “new rights and features”) on streams, allowing Apple to move its new streaming service’s monthly price below $10 per month.
The price drop is something only Apple has the weight to push (and that Apple could afford, at least for a time, regardless). Streaming services are, across the board, not profitable (though Pandora predicted this year would change that), operating on thin margins while paying massive swaths of revenue (rightly) to rightsholders. Apple’s $593 billion market cap, meanwhile — the company just broke its own record for iPhone sales — and now-longstanding stature in the entertainment industry, not to mention its “acquisition” of music business magician Jimmy Iovine, all seem to point to this news being entirely believable.
Streaming is expected to be the industry’s dominant form of digital revenue by the end of the decade (after revenues bottom out) as downloads slowly wane. Apple was ahead of the curve before with its iTunes store, and is gunning for the lead again.
The elephant in the room for Apple and Beats Music remains Google, not Spotify. The search giant is the only competitor in this race with pockets deep enough to, if labels won’t play ball (indies will certainly be reticent), offer its forthcoming streaming service as a loss-leader for an extended period of time, if necessary.
Apple, Warner Music Group and Universal Music Group did not immediately respond to a request for comment. Sony Music Entertainment refused to comment.