Apple is looking to lower music labels' revenue cut for Apple Music

Apple now pays 58 percent of revenue from Apple Music subscribers to the record labels, a higher cut than other major streaming services.

First reported by Bloomberg, Apple has initiated negotiation talks with major record labels. By contrast, Spotify was able to reduce its rate in recent negotiations from 55 percent - still a better deal than Apple had - down to 52 percent, although again the decrease was tied to certain guarantees on subscriber growth. The talks deal specifically with Apple Music's music catalog.

Although Apple is apparently looking for a discount, its services aren't the same as Spotify's, and deals will differ accordingly. And since Spotify is now officially too big to fail-with over 50 million paying subscribers, the labels are making the majority of their money from streaming now-this was seen as a prudent move by rightsholders.

Apple could renegotiate its rates with labels with the promise of healthy subscriber growth over time, just like Spotify did.

Put this one in the "You can do that, but why would you want to do that?" file: Tesla is talking to the music industry about creating its own streaming music service.

The major labels and Merlin, Hypebot has learned, are inclined to grant Apple Music a reduction, though not to as low as Spotify. Thanks to the rise of music streaming, digital downloads have fallen. Insiders say that the labels are generally open to reducing revenue share splits with Apple in line with the deals that have been done with Spotify, providing the tech giant offers similar commitments on growing its business, and presumably some other kickbacks on data and marketing.

"We believe it's important to have an exceptional in-car experience so our customers can listen to the music they want from whatever source they choose", a Tesla spokesperson said. Those figures could help to improve Apple's bargaining power, even if they still fall well short of what Spotify has achieved.

  • Zachary Reyes