Looking to undercut Spotify, Apple asks music labels for a price cut on streaming subscriptions

“There are lots of music subscription services that let people listen to all the songs they want for $10 a month,” Peter Kafka reports for Re/code.

“Apple thinks that price is too high,” Kafka reports. “Sources say Apple is talking to the big music labels about a new set of rights and features it would like to include in a revamped version of the Beats Music service it bought earlier this year. Among the things Apple wants is a new pricing structure that would allow it to sell the service for less than the $10 level it’s at now.”

“Discussions are in their early stages, sources say, and Apple isn’t planning on overhauling Beats Music until next year,” Kafka reports. “Many music industry observers believe there is a limited pool of consumers willing to pay $10 a month to rent music — especially since few people spent that much money on music during the CD era.”

Read more in the full article here.

17 Comments

    1. How about reducing the bands’ payments correspondingly from to $0.00004 or $0.00003 per stream to $0.00001?

      At least they’ll never earn enough to have to pay tax! And they’ll all qualify for welfare.

      1. Your reply is a little sharp and off-target, Des Gusting (nice handle, btw).

        Your are rightly concerned about the labels making profits at the expense of the bands and songwriters. I get that and I agree. However, that issue is related to, but not the same as the focus of this article/discussion regarding an overall monthly or annual price for streaming music service.

        The key question is, “What is a reasonable price point for a music streaming service that will attract and retain a large number of clients for the long term?”

        applepostle essentially suggests that Apple fully subsidize the service by including it with iTunes Match for the existing $25/year cost. That does not seem viable and, as an Apple shareholder, I would be against it unless Apple finds a reasonable way to monetize it. Just because a company has a lot of money, it should not start looking for ways to give it away.

        Off the cuff, I think that $4 to $5 a month (~$50 to $60 per year) would be reasonable and attractive to many people. If Apple wanted to bundle this service with iTunes Match for an additional $10 or $15 per year, then that would be a nice incentive for many iTunes users.

        Back to your issue, Des Gusting. The Apple ecosystem is big step forward for indie labels and independent bands hoping to make a little more money and achieve wider distribution for their music. Apple could attempt to apply pressure on the labels to share a greater percentage of revenue with the bands, but I doubt that Apple will do so when it is trying to negotiate a streaming discount. Other than that, the best option would be for bands to break away from the major labels, go indie, and keep a larger share of the money.

        Currently, many bands are still contractually tied to the major labels and, even if they break away, their legacy music will still be controlled by the labels and the established contracts. However, over time the new approaches for music distribution over the internet, such as iTunes and music streaming, will completely wipe out the old system and resolve this inequity. The major labels have been in decline for a while, and that trend will continue until a reasonable balance is achieved or the labels disappear.

  1. Spotify is the best money I spend a month. I’m absolutley clueless why people think $10 and zero ads for an all you can eat salad bar any album I’ve been able to think of. It’s the Netflix Instant of music.

    1. But, far superior to Netflix in that so much more of what you want is actually there for your consumption. Netflix is missing so much I actually want to watch; not true with Spotify.

      I agree. I’m a little surprised that Apple is trying to cut prices rather innovating to offer a better, more competitive experience. Spotify is great, but there’s certainly room for competition and improvement.

  2. Beats is $8.25/month if you buy the whole year at once. And totally worth it in my opinion. When you don’t have to pay for each song individually, you end up downloading way more than 8 songs in a month.

      1. He made a joke, and my response was a joke people! His handle is baldheadedjohn for gosh sakes, and that struck me as hilarious. I like it when people are not uptight about things like that. I guess that my response did not come across as funny. Good thing is have a real job…

        1. I’m pretty sure there are people who just down vote, prolly coz they resent being dullards. Don’t get me wrong, I usually deserve mine, but I often see innocuous comments get downed. I got your joke.

          Funny thing is, I actually have a “MacPro” tat (somewhere private. Actually, it says: “Macintosh: The choice for Professionals worldwide” but only certain ladies get to see that.)

  3. The artists say they cannot live on the payments currently common in online streaming. What they get is not much and streaming has cut into digital downloads which paid them more. Some artists have to make a choice between continuing a full time career in music or “getting a day job” and doing music on a much smaller scale.

    The people really feeling the pinch are those residing in the smaller areas away from CHR/Top 40 playlists and the Billboard Hot 100. Jazz, Classical, Bluegrass, Indie Rock, Folk, world music and other forms are the ones getting hurt.

    Why hold you care? The broad and evolving music scene in these niches informs and changes the bigger market and goes birth to the next new thing. Music stays vital when the gene pool is diverse and becomes stale when it is not.

    Apple can afford to pay more just as it’s customers can. Instead of squeezing the artists like Spotify and the others, offer the artists more for their wares and put a financial hurt on the competition. Otherwise, make little to nothing on the streaming service and destroy the profitability of the competition by paying MORE- not less. Apple can afford it- they cannot.

    The result will be good for the artists, good for music, good for Apple and good for it’s customers. What are the other companies going to say other than Apple pays the artists too much?

    1. I don’t really care because people will continue making music even if they never make a dime off of it. People were making music long before there was a music industry, and they will be making music long after the music industry is dead, simply because making music is a basic expressive need of humanity in general. If the people who were just doing it to make money give it up and get an office job, no big loss…because that wasn’t the good music anyway.

  4. The problem is that digital music still feels overpriced for what it delivers. It comes with no album art, lyrics, anything.

    Playing records, even cd’s is an experience. Apple needs to enhance the experience of music somehow. Digital downloading has just made it a commodity.

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