Apple, record labels negotiating last-minute streaming service terms days before expected WWDC launc

Posted:
in iPod + iTunes + AppleTV edited June 2015
With Apple widely expected to announce a new subscription-based music streaming service at its Worldwide Developers Conference next week, a report on Thursday suggests the company is cutting it close and holding last-minute negotiations with record labels.




According to sources, labels are fighting for a bigger slice of revenues from Apple's forthcoming music product than they currently net from rival services like Spotify, reports Bloomberg.

Talks are ongoing, but the report claims labels want an approximately 60-percent cut of subscription revenue from Apple, substantially more than an estimated going rate of 55 percent for Spotify. Usually, another 15 percent chunk of monthly fees are earmarked for publishers.

Apple is expected to price its streaming product at $10 per month, a price consistent with those charged by well-established competitors. It was previously reported that Apple was driving hard bargains with record labels and content owners in hopes of offering consumers a cheaper alternative, but today's report suggests those talks were fruitless.

As for implementation, sources said the subscription service is to be bundled with a new Music app that also includes music downloads and a revamped iTunes Radio. Elaborating on rumors of exclusive content offerings, the report claims Apple hired professionals to produce behind-the-scenes videos for high-profile musicians. Artists can share these videos, as well as other media, through a built-in social networking feature called Apple Connect.

Recent reports claim Apple's subscription service will coexist with Beats Music, which Apple assimilated as part of a larger $3 billion acquisition of Beats. Once "the kinks" are worked out, Apple will wind down Beats Music and transfer customers over to the new product.

Apple is expected to debut its music service at WWDC next week and AppleInsider will be on the scene with live coverage of the event.
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Comments

  • Reply 1 of 43
    rogifanrogifan Posts: 10,669member
    Whoever had the bright idea to give away that U2 album should be taken to the woodshed by Tim Cook.

    [QUOTE]
    Eric [email protected]_analytics Jun 2
    @DJFM01 @neilcybart the U2 free album with Apple was probably the worst decision by Eddy Cue ever

    I hope it **never** happens again

    Eric [email protected]_analytics Jun 2
    @DJFM01 Apple has nothing. U2 promo was *heavy* setback in recent negotiations with the labels for streaming[/QUOTE]
  • Reply 2 of 43
    slurpyslurpy Posts: 5,193member
    Quote:
    Originally Posted by Rogifan View Post



    Whoever had the bright idea to give away that U2 album should be taken to the woodshed by Tim Cook.

     

    Sorry, who the **** is eric, and why should I care what he tweets?

     

    And nice to see you're still beating that dead horse, Rogifan. You know Apple is doing well when giving away a free album is pretty much the worst thing that Apple did in recent memory, and has garnered so much outrage by those desperate to manufacture a controversy. You'd think, after almost a year, people like you would have moved on- but nope. 

  • Reply 3 of 43
    canukstormcanukstorm Posts: 1,981member
    Quote:

    Originally Posted by Slurpy View Post

     

     

    Sorry, who the **** is eric, and why should I care what he tweets?

     

    And nice to see you're still beating that dead horse, Rogifan. You know Apple is doing well when giving away a free album is pretty much the worst thing that Apple did in recent memory, and has garnered so much outrage by those desperate to manufacture a controversy. You'd think, after almost a year, people like you would have moved on- but nope. 


    Eric is a Marketing exec at NBC.  How senior (or not) he is, I'm not sure. Whether you care what he tweets or not is obviously up to you.  I know this because I have him on my Twitter feed.

  • Reply 4 of 43
    rogifanrogifan Posts: 10,669member
    slurpy wrote: »
    Sorry, who the **** is eric, and why should I care what he tweets?

    And nice to see you're still beating that dead horse, Rogifan. You know Apple is doing well when giving away a free album is pretty much the worst thing that Apple did in recent memory, and has garnered so much outrage by those desperate to manufacture a controversy. You'd think, after almost a year, people like you would have moved on- but nope. 

    He's an NBC exec with connections in the business. I trust he knows what he says. And it's not good if that album giveaway damaged relations with the record companies. It certainly wasn't worth it.

    What I'd love to know is why negotiations are so difficult. I thought that was one of the reasons for spending $3b on Beats - that Jimmy Iovine was Apple's meal ticket to deals with the record companies.
  • Reply 5 of 43
    calicali Posts: 3,495member
    rogifan wrote: »
    He's an NBC exec with connections in the business. I trust he knows what he says. And it's not good if that album giveaway damaged relations with the record companies. It certainly wasn't worth it.

    What I'd love to know is why negotiations are so difficult. I thought that was one of the reasons for spending $3b on Beats - that Jimmy Iovine was Apple's meal ticket to deals with the record companies.

    So during Apple negotiations record labels bring up a free U2 album?
    Pathetic.

    I see you're still beating the dead horse named Beats.
    Beats was JUST purchased. They are but a blink in Apple's history. I don't get why people expect Jimmy to close deals with every record label In less than a year. No one bi***es about the other 30 or so companies Apple has bought and hasn't released anything with yet.

    At least Beats is making Apple profit.* The other 30 or so startups haven't made Apple any.

    *Beats made 1.5B in 2013.
  • Reply 6 of 43
    ksecksec Posts: 1,567member
    Optimistically Speaking , Apple may be able to get up to 100M subscriber worldwide, So a $10 per month will get $12B per year. Assume Apple get 20% for running the business, ( The cost of bandwidth, storage, encoding, labors, promotion etc ), that is $10B a year.

    Is that good enough for the music industry? Personally $10 a month is too expensive. I was thinking in the line of $8 a month. I think it also depends on where you live, so I hope Apple wont do a one price fit all system.
  • Reply 7 of 43
    SpamSandwichSpamSandwich Posts: 31,497member
    ksec wrote: »
    Optimistically Speaking , Apple may be able to get up to 100M subscriber worldwide, So a $10 per month will get $12B per year. Assume Apple get 20% for running the business, ( The cost of bandwidth, storage, encoding, labors, promotion etc ), that is $10B a year.

    Is that good enough for the music industry? Personally $10 a month is too expensive. I was thinking in the line of $8 a month. I think it also depends on where you live, so I hope Apple wont do a one price fit all system.

    Speaking for myself, I'll still tune into local listener-supported radio to discover new music instead of go online. No subscription radio service has caught my interest, plus I don't have an unlimited data plan for my phone, so there's almost no opportunity for me to listen to streaming music anyway.
  • Reply 8 of 43
    Quote:

    Originally Posted by SpamSandwich View Post





    Speaking for myself, I'll still tune into local listener-supported radio to discover new music instead of go online. No subscription radio service has caught my interest, plus I don't have an unlimited data plan for my phone, so there's almost no opportunity for me to listen to streaming music anyway.



    Pretty much the same, though I'm in WiFi locations fairly often. I still prefer to own the music though, because with a six-disc changer in my car it's easier to just burn mix CD's still (not easy to install an aftermarket HU so no iPod input apart from cassette adapter).

  • Reply 9 of 43
    Quote:

    Originally Posted by CanukStorm View Post

     

    Eric is a Marketing exec at NBC.  How senior (or not) he is, I'm not sure. Whether you care what he tweets or not is obviously up to you.  I know this because I have him on my Twitter feed.


     

    And how smart is it for an exec at a company like NBC to be bad-mouthing Apple publicly? Usually it's the people who have nothing to lose (or don't matter in the industry) who are always complaining about Apple. Or cowards hiding behind an "anonymous source".

  • Reply 10 of 43
    alxcayalxcay Posts: 3member

    Could someone give me their opinion on this? Do you think that the new streaming service will include every single song that is currently on the iTunes Store or is there some sort of different licensing for online music streaming, because I know from experience that apps like spotify and google play music are limited in that they have less music than the iTunes Store? Thanks!

  • Reply 11 of 43
    kkerstkkerst Posts: 330member
    Totally agree, I will never pay for radio...
  • Reply 12 of 43
    foggyhillfoggyhill Posts: 4,767member
    Quote:

    Originally Posted by CanukStorm View Post

     

    Eric is a Marketing exec at NBC.  How senior (or not) he is, I'm not sure. Whether you care what he tweets or not is obviously up to you.  I know this because I have him on my Twitter feed.


     

    He's obviously not senior enough to shut his fracking mouth during negotiations (which would be the minimum expected from anyone close to the top), so obviously some irrelevant twit.

  • Reply 13 of 43
    asdasdasdasd Posts: 5,330member
    Why would the promo matter to the industry. U2 and the label were paid
  • Reply 14 of 43
    tmaytmay Posts: 3,980member
    Quote:
    Originally Posted by Rogifan View Post



    Whoever had the bright idea to give away that U2 album should be taken to the woodshed by Tim Cook.

    Apple is the most powerful entity in online music distribution. Whatever the fallout was from the U2 album, it has zero to do with negotiations.

     

    The music industry doesn't want to give Apple any more power than they already have, but they also know that Apple delivers sales and revenue to the industry.

     

    Perhaps you would do well to show links that details the "damage" rather than a cryptic tweet from, I'm assuming, an insider at NBC Universal.

     

    Edit: I agree with foggyhill. This guy should keep his mouth shut. 

     

    http://www.musicbusinessworldwide.com/that-u2-apple-stunt-wasnt-the-disaster-you-might-think/

     

    From the above link, it looks like that the "stunt" was very effective, at the very least for U2.

  • Reply 15 of 43
    gatorguygatorguy Posts: 21,267member
    Speaking for myself, I'll still tune into local listener-supported radio to discover new music instead of go online. No subscription radio service has caught my interest, plus I don't have an unlimited data plan for my phone, so there's almost no opportunity for me to listen to streaming music anyway.
    FWIW I think you can download playlists to over your smartphone over wifi on Google Music to avoid streaming costs. Download now, listen later.

    What confuses me is how GOOG was able to get the licenses in place a year ago (and in dozens of countries) but Apple is having trouble doing so. They are both subscription and they'll be in the same price range too if the Apple rumored price is correct.. Anyone got an idea why the negotiations are a problem? Is Apple low-balling the content owners? Is it something else? Maybe there's no problem anyway and this is just a bogus rumor.
  • Reply 16 of 43
    markm49ukmarkm49uk Posts: 97member

    Apple - just do it like the rest of them do.  I've been beating this horse for a while now but they are moving too slow in this instance.  In my opinion Apple are playing too nicely and need to move aggressively and either suffer the consequences or win the battle - these music and TV executives think they have all the answers yet they have little power in the actual distribution.

     

    Just do it Apple - quickly.

  • Reply 17 of 43
    tmaytmay Posts: 3,980member
    Quote:

    Originally Posted by Gatorguy View Post





    FWIW I think you can download playlists to your smartphone on Google Music to avoid streaming costs



    What confuses me is how GOOG was able to get the licenses in place a year ago (and in dozens of countries) but Apple is having trouble doing so. They are both subscription and they'll be in the same price range too if the Apple rumored price is correct.. Anyone got an idea why the negotiations are a problem? Is Apple low-balling the content owners? Is it something else? Maybe there's no problem anyway and this is just a bogus rumor.

    The linked article from the original post is that best that I could find.

     

    It's just negotiations. Same as it ever was, but Apple is the most powerful entity to deal with, and the labels want a better take from Apple than Spotify. Apple will also be creating videos from willing musicians to compete against YouTube, and the labels want YouTube to do a better jobs of converting to subscriptions.

     

    When all is said and done, Apple will remain the the powerhouse.

     

    http://www.bloomberg.com/news/articles/2015-06-04/apple-said-to-push-to-complete-streaming-music-deal-before-event

     

    Both parties want a deal is the main thrust of that article.

  • Reply 18 of 43
    gatorguygatorguy Posts: 21,267member
    tmay wrote: »
    The linked article from the original post is that best that I could find.

    It's just negotiations. Same as it ever was, but Apple is the most powerful entity to deal with, and the labels want a better take from Apple than Spotify. Apple will also be creating videos from willing musicians to compete against YouTube, and the labels want YouTube to do a better jobs of converting to subscriptions.

    When all is said and done, Apple will remain the the powerhouse.

    http://www.bloomberg.com/news/articles/2015-06-04/apple-said-to-push-to-complete-streaming-music-deal-before-event

    Both parties want a deal is the main thrust of that article.
    Does the article compare Apple's service to Spotify's because both services will have a free ad-supported tier alongside a subscription model? I thought Apple's supposedly new streaming service was subscription only making it very similar to Google's offering even price-wise. Maybe I've misread it.
  • Reply 19 of 43
    tmaytmay Posts: 3,980member
    Quote:

    Originally Posted by Gatorguy View Post





    Does the article compare Apple's service to Spotify's because both services will have a free ad-supported tier alongside a subscription model? I thought Apple's supposedly new streaming service was subscription only making it very similar to Google's offering even price-wise. Maybe I've misread it.

    From my reading previously, Apple would support free streaming for a limited trial period, but iTunes Radio will remain the free, ad supported service. The rumor is that the monthly subscription will be $10.00 ($9.99?). I don't know what Google charges.

     

    Apple will likely be able to differentiate its service based on extras like exclusives and its connections with musicians.

  • Reply 20 of 43
    gatorguygatorguy Posts: 21,267member
    tmay wrote: »
    From my reading previously, Apple would support free streaming for a limited trial period, but iTunes Radio will remain the free, ad supported service. The rumor is that the monthly subscription will be $10.00 ($9.99?). I don't know what Google charges.
    I think the same $10/mo, but they also have a free trial period (60 days maybe?) just as Apple is rumored to include. You're probably right about the time-restricted exclusives since they already do that with iTunes. No reason for the subscription service to be any different is there?
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