Apple secures lower streaming rate in new deal with Warner Music Group, report says

Posted:
in iPod + iTunes + AppleTV edited September 2017
Apple has reached a new agreement with Warner Music Group that will see the tech giant pay out a smaller percentage of Apple Music revenue than it did when the service launched in 2015.




Citing sources familiar with the matter, Bloomberg reports Apple's renewed arrangement with Warner Music Group comes as technology companies and major record labels spar over licensing fees. With existing contracts soon to expire, Apple is looking to pay Warner, and perhaps other record labels, a smaller percentage of Apple Music sales as the service grows out its customer base.

With a boom in on-demand music, music rights holders are amenable to receiving lower rates so long as services like Apple Music continue to sign up subscribers, the report said. Currently, Apple pays labels 58 percent of sales, a rate the company is looking to drop to 55 percent this year. That figure could see further reductions if subscriber uptake continues at a rapid pace, the report said.

Apple's new deal was in part helped along by market competitor Spotify. The segment leader earlier this year secured a rate reduction from Warner Music Group, down from 55 percent to about 52 percent, dependent on subscriber performance. Warner also struck a long-term deal with YouTube, presumably involving streaming rate cuts.

Alongside the Warner deal, Apple is also on the cusp of inking a similar arrangement with Sony Music Entertainment, the report said.

Buoyed by a surging streaming market, Apple and other service providers have earned leverage in negotiations with major labels like Warner and Sony. Still, Universal Music Group, owner of the world's top label, is still reluctant to cede ground on the issue, and a rate reduction deal with Apple is unlikely to surface anytime soon.

Comments

  • Reply 1 of 11
    Big deal. I guess musicians can starve a bit more than they normally do. Streaming is too expensive, as we all know.... 

    (That's meant to be sarcastic. And no, I am not a musician). 
    gatorguydecodering
  • Reply 2 of 11
    Big deal. I guess musicians can starve a bit more than they normally do. Streaming is too expensive, as we all know.... 

    (That's meant to be sarcastic. And no, I am not a musician). 
    Unless completely independent, bands normally make pennies from record sales, or in this case downloads and streaming and instead make most of their money from concert tickets and merchandise. Sad reality.
    baconstang
  • Reply 3 of 11
    I think as long as Apple can prove that their iOS user base will continue to climb, TimeWarner should be convinced they'll get their money's worth. Apple needs to market AppleMusic more than they currently do. Considering Apple has 1B active iOS users, 20 to 30 million AppleMusic subscribers doesn't seem like a very large number. That's about 3% tops of Apple's entire iOS user base. I would have thought Apple could get closer to 50 million AppleMusic subscribers at this point but that was just my rough guess.
  • Reply 4 of 11
    ksecksec Posts: 1,515member
    I think as long as Apple can prove that their iOS user base will continue to climb, TimeWarner should be convinced they'll get their money's worth. Apple needs to market AppleMusic more than they currently do. Considering Apple has 1B active iOS users, 20 to 30 million AppleMusic subscribers doesn't seem like a very large number. That's about 3% tops of Apple's entire iOS user base. I would have thought Apple could get closer to 50 million AppleMusic subscribers at this point but that was just my rough guess.
    1. Because their competitor is actually rather good at it.

    2. Apple Music, after all the iteration, is still very poor in overall quality. And being let down by its iTunes software on Windows.

    I am honestly surprise Apple has 20 -30 million members, may be most of them are in US, where the music collection are better, and more Apple Fans are buying into it.  
  • Reply 5 of 11
    bitmodbitmod Posts: 190member
    I think as long as Apple can prove that their iOS user base will continue to climb, TimeWarner should be convinced they'll get their money's worth. Apple needs to market AppleMusic more than they currently do. Considering Apple has 1B active iOS users, 20 to 30 million AppleMusic subscribers doesn't seem like a very large number. That's about 3% tops of Apple's entire iOS user base. I would have thought Apple could get closer to 50 million AppleMusic subscribers at this point but that was just my rough guess.
    Have you tried Spotify? 
    Vastly superior in every conceivable way. 

    Apple needs to implement HiFi audio streaming. (MQA)
    Make Airplay easier to license for HiFi companies.
    Remove the DRM from Airplay.
    Fire everyone they have doing curation and start over. 
    Completely re-work the GUI of Apple Music so it's even somewhat logical. 
    Support more HiFi companies.
    Add better DAC's to their gear.

    They do this and they won't be perceived as a streaming service catering to top-40 teenie boppers - listening to garbage on garbage earbuds. 
    Curated by lousy algorithms perpetuated by mainstream DJ's recommending more the same mainstream. 

    Streaming is about the excitement of discovering new music and having it sound great and work flawlessly. Spotify gets this. 
    Apple see's streaming as just another computerized revenue stream to enhance their ecosystem.






    decoderinganantksundaramrepressthis
  • Reply 6 of 11
    bitmod said:
    They do this and they won't be perceived as a streaming service catering to top-40 teenie boppers - listening to garbage on garbage earbuds. 
    Curated by lousy algorithms perpetuated by mainstream DJ's recommending more the same mainstream. 

    Streaming is about the excitement of discovering new music and having it sound great and work flawlessly. Spotify gets this. 
    Apple see's streaming as just another computerized revenue stream to enhance their ecosystem.
    I've never had a single issue with Apple Music and I have searched for a lot of random stuff, from random ambient to random garage rock from the sixties and everything in-between and the service hasn't failed me once. 
    mike1
  • Reply 7 of 11
    JinTech said:
    bitmod said:
    They do this and they won't be perceived as a streaming service catering to top-40 teenie boppers - listening to garbage on garbage earbuds. 
    Curated by lousy algorithms perpetuated by mainstream DJ's recommending more the same mainstream. 

    Streaming is about the excitement of discovering new music and having it sound great and work flawlessly. Spotify gets this. 
    Apple see's streaming as just another computerized revenue stream to enhance their ecosystem.
    I've never had a single issue with Apple Music and I have searched for a lot of random stuff, from random ambient to random garage rock from the sixties and everything in-between and the service hasn't failed me once. 
    Except for every person that's satisfied with Apple Music, I think there are several people who feel the same as JinTech. I happen to be one.

    I would sign up for Apple Music in a heartbeat if they offered a CD-quality option, even if the interface seems less than ideal. And I've felt for a long time that Apple could easily up its game in the whole chain of music reproduction -- give some heft to its claims that it loves music -- and offer its millions of users a real chance to enjoy a high-quality listening experience. But it shoves lower-quality DACs into its devices and insists that 256K files are great.

    Technology has improved enough so that what were good choices more than a decade ago could/should be left behind. Lossy music files should merely be an option for when people are streaming on-the-go over cellular, while standardizing on (minimally) ALAC or (ideally) CD-quality for general playback.

    That said, the upcoming HomePod looks very interesting, and I'm hoping it's the beginning of Apple paying real attention to music playback.
    gatorguy
  • Reply 8 of 11
    ksec said:
    I think as long as Apple can prove that their iOS user base will continue to climb, TimeWarner should be convinced they'll get their money's worth. Apple needs to market AppleMusic more than they currently do. Considering Apple has 1B active iOS users, 20 to 30 million AppleMusic subscribers doesn't seem like a very large number. That's about 3% tops of Apple's entire iOS user base. I would have thought Apple could get closer to 50 million AppleMusic subscribers at this point but that was just my rough guess.
    1. Because their competitor is actually rather good at it.

    2. Apple Music, after all the iteration, is still very poor in overall quality. And being let down by its iTunes software on Windows.

    I am honestly surprise Apple has 20 -30 million members, may be most of them are in US, where the music collection are better, and more Apple Fans are buying into it.  
    I’d be curious to know what Apple Music subscriptions would look like if it had been developed as a stand alone app not pre-installed on your device. I have a feeling the power of defaults drove Apple Music subscriptions.
  • Reply 9 of 11
    mike1mike1 Posts: 1,764member
    bitmod said:
    I think as long as Apple can prove that their iOS user base will continue to climb, TimeWarner should be convinced they'll get their money's worth. Apple needs to market AppleMusic more than they currently do. Considering Apple has 1B active iOS users, 20 to 30 million AppleMusic subscribers doesn't seem like a very large number. That's about 3% tops of Apple's entire iOS user base. I would have thought Apple could get closer to 50 million AppleMusic subscribers at this point but that was just my rough guess.
    Have you tried Spotify? 
    Vastly superior in every conceivable way. 

    Apple needs to implement HiFi audio streaming. (MQA)
    Make Airplay easier to license for HiFi companies.
    Remove the DRM from Airplay.
    Fire everyone they have doing curation and start over. 
    Completely re-work the GUI of Apple Music so it's even somewhat logical. 
    Support more HiFi companies.
    Add better DAC's to their gear.

    They do this and they won't be perceived as a streaming service catering to top-40 teenie boppers - listening to garbage on garbage earbuds. 
    Curated by lousy algorithms perpetuated by mainstream DJ's recommending more the same mainstream. 

    Streaming is about the excitement of discovering new music and having it sound great and work flawlessly. Spotify gets this. 
    Apple see's streaming as just another computerized revenue stream to enhance their ecosystem.






    I'm betting you work for an audio company that has to spend the time developing a product that works well. Been there. DRM is not going away, Airplay development is pretty straightforward and it's very easy to license should it fit into a product plan. Your comment "Streaming is about the excitement of discovering new music and having it sound great and work flawlessly." is your opinion, not a fact.

    1. Sad as it may be, the vast majority of users don't give a rat's butt about sound quality. This is evidenced by the preponderance of cheap BT speakers, sound bars and/or headphones that the vast majority of people seem to use. Just look around. I too wish that a higher fidelity stream or download was available. I have the gear and desire to appreciate it. However, I would never presume to think I was in the majority.

    2. Streaming is NOT necessarily about discovering new music.For some, it's about hearing what they want to listen too, when they want to listen to it. For me, new music is not what I'm looking for.


    jbdragon
  • Reply 10 of 11
    People blaming Apple for doing Apple the way Apple wants to do Apple is just silly. Apple Music, the iPhone, etc etc are all options. Not one person is forced to use Apple in order to stay alive.
    mike1jbdragonrepressthis
  • Reply 11 of 11
    bitmod said:
    I think as long as Apple can prove that their iOS user base will continue to climb, TimeWarner should be convinced they'll get their money's worth. Apple needs to market AppleMusic more than they currently do. Considering Apple has 1B active iOS users, 20 to 30 million AppleMusic subscribers doesn't seem like a very large number. That's about 3% tops of Apple's entire iOS user base. I would have thought Apple could get closer to 50 million AppleMusic subscribers at this point but that was just my rough guess.
    Have you tried Spotify? 
    Vastly superior in every conceivable way. 

    Apple needs to implement HiFi audio streaming. (MQA)
    Make Airplay easier to license for HiFi companies.
    Remove the DRM from Airplay.
    Fire everyone they have doing curation and start over. 
    Completely re-work the GUI of Apple Music so it's even somewhat logical. 
    Support more HiFi companies.
    Add better DAC's to their gear.

    They do this and they won't be perceived as a streaming service catering to top-40 teenie boppers - listening to garbage on garbage earbuds. 
    Curated by lousy algorithms perpetuated by mainstream DJ's recommending more the same mainstream. 

    Streaming is about the excitement of discovering new music and having it sound great and work flawlessly. Spotify gets this. 
    Apple see's streaming as just another computerized revenue stream to enhance their ecosystem.





    So what evidence do you have that Spotify is "vastly superior" in every way to Apple Music "in every conceivable way?"

    I think it is true that Spotify had a better more straightforward UI when Apple Music debuted but AM continues to improve with every iteration (like the addition of lyrics).  Most people I know who have Spotify are disappointed and it is only inertia that is preventing them from switching to AppleMusic (having to redo playlists specifically).

    When musicians have a spat with a streaming service it is almost always with Spotify (I am thinking Radiohead specifically).

    AppleMusic builds on the history of iTunes and iTunes exclusives which are available to me as a subscriber which are not available to Spotify subscribers.

    Could AM be better?  Of course, I hope Apple's media hires make music specific variety shows and help aritists make media for the service to further differentiate Apple Music from it's competitors.  The real enemy here is probably YouTube/Google/Alphabet who have been gouging artists with music streaming masquerading as videos which absolutely steals from artists.
Sign In or Register to comment.