Warner Music Group has concluded a licensing deal with Apple Music which, according to people familiar with the negotiations, will see the music major receive a smaller cut of royalties than it did under its first deal with the streaming service.
Through the new arrangement, WMG, the label home to Ed Sheeran, Muse and Bruno Mars, will make its repertoire available to Apple Music, which opened for business in 2015, and the iTunes download store.
The deal, news on which broke overnight, comes a matter of weeks after WMG completed a licensing partnership with Spotify, giving the market-leading service the full complement of content deals with the majors and indies (through Merlin) and setting the stage for the tech firm’s planned stealth “direct listing” on the New York Stock Exchange .
Apple reportedly pressed for – and got – royalty rate cuts at the negotiating table after Spotify secured reductions with rights holders. Since launch, Apple has been paying labels 58 percent of revenue, a higher rate than Spotify pays, reports Bloomberg. Apple is now keen to get that figure down to 55 percent, equal to Spotify’s terms, though the Swedish business’ rates decrease further if subscriber numbers hit certain targets, notes Billboard.
Warner Music now becomes the first major label to lock up content agreements deals with the three giants in digital music: Spotify, Apple Music and Google’s YouTube.
Spotify, the market-leading streaming service, recently announced its paid subscriber base had ticked past to 60 million, and paid subscribers were signing up at a rate of about 2 million a month (Spotify boasted an active user base of about 140 million, the majority of whom take advantage of its ad-supported “free” tier). Apple Music boasted 27 million subscribers (with an undisclosed number of free trial users) as at June, exactly two years after Apple launched its streaming music ambitions.