Apple Establishes New Streaming Deal With Warner Music Group, Will Pay Lower Rates

As Apple's original Apple Music deals with record labels begin expiring, Apple has been pursuing lower streaming rates as it negotiates new deals. Apple recently reached a deal with Warner Music Group, reports Bloomberg, and the Cupertino company was indeed able to secure a lower rate.

Warner Music Group will provide Apple with a catalog that includes Ed Sheeran, the Red Hot Chili Peppers, Bruno Mars, and more, for iTunes, the online store, and Apple Music. Apple will be paying Warner Music Group a smaller percentage of sales from Apple Music subscribers than it did in its original deal. Apple is also close to a deal with Sony Music Entertainment, but is still negotiating with Universal Music Group.

Large technology companies and music rights holders are establishing a framework this year for how to share proceeds from on-demand streaming, now the dominant source of sales for the record business in the U.S. Music rights holders are willing to accept a slightly smaller share of the sales from on-demand services, provided those services continue to sign up paying subscribers at a high rate.

Apple began aiming for a lower rate after Spotify was able to secure a rate reduction. Since 2015, Apple has been paying labels 58 percent of revenue from Apple Music subscribers, while Spotify was paying 52 percent. Apple is now said to be considering providing labels with a 55 percent cut, with that number decreasing should Apple meet certain subscriber number targets.

Since its debut in June of 2015, Apple Music has seen steady growth, undoubtedly giving the company an upper hand when negotiating new deals with labels. As of June 2017, Apple Music had 27 million paying subscribers.

Tag: Apple Music

Top Rated Comments

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riverfreak

14 months ago

Awesome news. Greedy artists are getting paid way too much for making content. Only the management and infrastructure people should be entitled to profit.

Rating: 24 Votes

Mirice99

14 months ago

That's wondeful, content creator make even less while Apple makes even more money.

Rating: 12 Votes

OldSchoolMacGuy

14 months ago

So let's be realistic here for a second. None of this is going to be passed on to the customer and will result in artist being payed less. Then we will have a bunch of artist pulling their music from streaming services.

And yet none of them have been successful without streaming. Sorry, but streaming is the norm now. It would be like refusing to be played on the radio back in the '80s or '90s. You simply couldn't have become successful without it. Every industry has their necessary evils.

Artists use to take more profits from their albums. Now they're only paid for the songs which are played. This can still make them insane money. More than they would have selling albums, as now you don't just get paid 1 time but every time someone listens to a song.

But they're also realizing they need to do more if they want the mega-millions to roll in. Touring is becoming a bigger part of how the big acts make money. I don't see anyone complaining that streaming is causing their favorite artist to come to town more often.

The big names now even richer than ever before. Streaming isn't hurting them. And the truth is the smaller acts never saw huge album sales before anyways. The current state of streaming opens those small guys up to people who would never have paid to check out their album but are now paying them by listening to their songs. In this way it has spread the wealth across more small acts than in the past. On average people are listening to more than double the number of artist they did 10 years ago, and that's great for the music industry.

Rating: 7 Votes

goobot

14 months ago

Rating: 6 Votes

Jakewilk

14 months ago

I guess this means less subscription money spent paying music labels and more money spent making carpool karaoke episodes?

Rating: 5 Votes

JeffyTheQuik

14 months ago

Cool! I'm looking forward to them passing on the savings!

oh...

Cool! I'm looking forward to them passing on the profits in dividends!

Rating: 5 Votes

Michael Scrip

14 months ago

Awesome news. Greedy artists are getting paid way too much for making content. Only the management and infrastructure people should be entitled to profit.

This is nothing new.

If you sign a record contract... you're lucky to get 10%

The other 90% goes to the labels, marketing, management, producers, songwriters, etc.

If you think that's unfair... then you shouldn't have signed a record deal in the first place! :P

Rating: 3 Votes

Dagless

14 months ago

The next headline I want to read is that due to lower fees to record studios, Apple Music will cost less.

No? Not happening? Well who gets that extra money now?

Rating: 3 Votes

itsmilo

14 months ago

Where's Taylor Swift during this darkest hour?

Must not be controversial enough this time to stage a publicity stunt over.

Havent you heard? The old Taylor is dead

Rating: 2 Votes

thisisnotmyname

14 months ago

Sorry if facts hurt those who so blindly devoted to Apple

If you think that the problem is whether Apple (and other streaming services) pay out 58% or 55% of revenue in royalties and not the 90% take the labels keep (97.5% by the time you factor in RIAA accounting rules) or policies such as breakage fees (originating with vinyl records that broke in transit but continued into CDs and even digital download eras) or opaque practices of handling royalty advance overages from the streaming services then only one of us is "blind." Record label contracts and accounting are crazy. Record labels need to go the way of the dinosaurs. Better equipment for home studios reduced the need for a label's support in production. Apple and companies like them, first with iTunes and now Apple Music, are doing the same with distribution (albeit with Indie aggregators). As online tools (including discovery services in those streaming services) and communities get better for promotion hopefully we can finally say goodbye to labels.

Rating: 2 Votes

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