Business News Deals Digital Labels & Publishers Top Stories

Warner Music signs new deal with Apple Music

By Chris Cooke | Published on Thursday 7 September 2017

Apple has reportedly signed a new deal with Warner Music covering both the iTunes store and the Apple Music streaming service. According to Bloomberg, it’s the first new deal between the tech giant and the mini major since Apple launched its streaming platform in 2015.

Following the lead of Spotify, which has now entered into new multi-year licensing deals with all three majors and indie-label repping Merlin, Apple is seeking to reduce its revenue share commitment to the record companies under the new arrangements.

With streaming income now such a key revenue stream for the recorded music industry, the mainly loss-making digital service providers are keen to reduce their royalty commitments to the labels slightly, partly to compensate for rate increases secured by some of the music publishers, and partly to ensure they have a business model that can actually go into profit once the certain number of paying subscribers has been achieved.

The labels are agreeing to take a slight cut to their share of the digital pie in return for commitments by the streaming companies to sign up significant numbers of new subscribers. The labels have also been looking for more data and marketing kickbacks.

Although the specifics of every deal done between a streaming service and a label, distributor, publisher or collecting society are slightly different, generally Apple offered a slightly higher revenue share split to the music companies than Spotify.

It’s thought that Apple is now seeking a similar discount to that achieved by its rival, meaning it will still be paying slightly more to the labels in terms of revenue share. Unlike Spotify, cash rich Apple doesn’t need its streaming business to be quite so lucrative long-term, though with ‘services’ becoming a more important revenue stream to the tech firm, Apple Music isn’t just a break-even enterprise that exists to sell more smart phones.

Warner was the last of the major music firms to renew with Spotify, but is the first sign up to the latest Apple deals. Bloomberg’s sources say a Sony deal is nearly done too, but Universal’s new arrangement will take more time.

When it comes to the indies, because Apple added streaming to its existing iTunes agreements, Merlin isn’t involved in these deals, which came about before the indie sector digital rights agency was launched. That, of course, resulted in a headline-grabbing skirmish between Apple and the independents when the first draft of its streaming deal was put on the table. The tech giant will be hoping all future updates to its indie agreements go a bit smoother.