Apple Inc. has tried to increase its subscribers base by offering enticing content from the music industry. However, it might be an additional expense the tech giant has to cover. This is why the company plans to make the most of the expiration deadline of its contract by going on a hunt. Apple intends to decrease the shares in record label deals.
Apple Entices Clients with Music Content through Both Apple Music and iTunes
Apple Music has been offering great content for two years now. The service has an appealing collection of millions of songs on demand. On top of that, the company is also handling its iTunes store. This service offers individual albums to people for a price. By the end of June, Apple will no longer be legally bound to its record label deals. However, if the two sides fail to reach an agreement on terms, the company might have no other choice than to extend its original contract.
Apple Is Looking at a 53% Rate for Record Label Deals
Apple wants to reach through negotiation talks similar rates that Spotify Ltd. pays its labels. Moreover, this contract expiration is a great occasion for both parties to adapt to the modern trends in this domain. The music industry had to face severe declines in this digital age. However, there is new hope thanks to streaming services that managed to conciliate the online medium with record labels.
Therefore, in 2016 the music industry grew 5.9% at a global level thanks to paid services such as Apple Music and Spotify. The original contract forces Apple to redirect 58% of revenue coming from Apple Music to record labels. By comparison, Spotify managed to renegotiate this share from 55% to 52% as of recently. While such companies are not ignoring the idea of negotiations with Apple, they expect guarantees that Apple’s subscribers base is heading up.
Image source: 1