Apple Seeking Lower Rates With Record Labels as Initial Deals Start Expiring

Apple is said to be aiming to reduce the share of revenue record labels get from streaming music as it works to establish new deals for Apple Music and iTunes, reports Bloomberg.

Apple is reportedly pursuing lower rates as part of an effort to revise its "overall relationship" with the music industry. Apple's current deals with record labels expire at the end of June, but Bloomberg's sources say they will be extended if a new agreement can't be reached.

Apple currently pays out some of the highest royalty rates with record labels receiving 58 percent of revenue from Apple Music subscribers, but it wants a deal closer to what Spotify recently negotiated. Spotify pays 52 percent of revenue from subscribers, down from an earlier rate of 55 percent.

Spotify's new rate is contingent on subscriber growth, and music labels are said to be open to negotiating a similar deal with Apple. Record labels also want assurances from Apple that iTunes will be promoted in countries like Germany and Japan, where most music is still purchased rather than streamed.

The growth of Apple Music hasn't been as detrimental to iTunes as labels had feared. But record labels are still asking for precautions. Labels have asked Apple to commit to promoting iTunes, and music in general, in countries where streaming isn't as prevalent.

Since its 2015 introduction, Apple Music has seen steady growth, which may give Apple an upper hand when negotiating new deals with labels. As of June 2017, Apple Music has 27 million paying subscribers, up from 20 million in December of 2016.