“Apple Inc. has secured a deal for songs from Warner Music Group, the technology giant’s first agreement with a major label since introducing its on-demand music service two years ago, according to people familiar with the matter,” Lucas Shaw and Alex Webb report for Bloomberg News. “Apple plans to pay record labels a smaller percentage of sales from Apple Music subscribers than it did under its first deal for the streaming service, the people said, asking not to be identified discussing private information.”
“Large technology companies and music rights holders are establishing a framework this year for how to share proceeds from on-demand streaming, now the dominant source of sales for the record business in the U.S. Music rights holders are willing to accept a slightly smaller share of the sales from on-demand services, provided those services continue to sign up paying subscribers at a high rate,” Shaw and Webb report. “Paid streaming was still a fledgling business when the company signed its initial deal, and it was willing to lose a little extra money because the service was intended to boost sales of the iPhone.”
“Apple has been paying labels 58 percent of sales, a higher rate than Spotify pays. Apple also traditionally granted publishers a higher rate than its Swedish rival. Apple is now considering giving labels a cut of 55 percent, which would decrease if subscriber numbers met targets,” Shaw and Webb report. “Sony Music Entertainment, owner of the second-largest record label, is also on the verge of a deal with Apple, one of the people said. A deal between Apple and Universal Music Group, owner of the top label, is further off.”
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MacDailyNews Take: With no free ad-supported tier, the labels love Apple vs. their outmoded, under-matched rivals who are giving away the store. Plus, Apple saved the music industry, too, so there’s that.
Musicians and the music industry undermine themselves by allowing their music to be streamed by “free,” ad-supported outfits. – MacDailyNews, December 17, 2015