Apple is working to lessen the revenue share record labels get from the company’s streaming service.
According to sources cited in Bloomberg, the record labels’ deals with Apple expire at the end of June, and Apple wants to “revise [its] overall relationship with the music industry.”
The negotiations would bring Apple closer to the rate Spotify pays labels, and allow both sides to adjust to the new realities of the music industry. Streaming services have been a source of renewed hope following a decade of decline in the digital age.
Currently, labels receive around 58% of revenue from Apple Music subscribers—the company deliberately offered sweet deals to labels when it first launched to help build out its library. But Spotify pays labels just 52% now, down from 55%. In order to reach these numbers, Apple needs to convince record labels that its music platform is expanding before they may be willing to ink a new deal.
The rise of streaming platforms spurred 6% growth in the music industry last year worldwide.
Launched in Sweden in 2008, Spotify boasts more than 100 million active users, including over 50 million paying subscribers, making it the largest music streaming service globally, ahead of Apple Music (29 million) and Google Play.