Negotiations for new Apple Music deals are currently underway with record labels and this time around Apple wants to come away with a much bigger cut of the revenue after overpaying for the last two years.
The company is likely to get its wish too, according to a new report that reveals the labels are supposedly open to the possibility of taking a smaller share as long as Apple Music is able to continue growing.
“The record labels’ deals with Apple expire at the end of June, though they are likely to be extended if the parties can’t agree on new terms by then,” reports Bloomberg, citing people familiar with the private discussions.
Record labels currently receive about 58% of revenue from Apple Music subscribers, while Spotify only pays out about 52%. A new deal was struck between Spotify and record labels that lowered their rate from 55%. Apple hopes to strike a deal that puts it on the same level as Spotify.
A big reduction in Apple’s rate will likely happen as long as it expands its subscriber base and meets other requirements. Even though the record labels will be taking a smaller slice, the expanding digital streaming market will mean it brings in more revenues than the year before.
Apple Music currently has just under 30 million paid subscribers while Spotify boasts over 50 paying listeners. Labels reportedly want Apple to continue promoting iTunes though to help prop up album and single sales.