Since the release of Apple Music, the relationship of the Cupertino-based firm with Spotify has been more strained than usual. Spotify accused the iPhone maker previously of favoring its own music streaming services, and it appears that the anti-competitive accusation is getting clearer these days.
No impact on the end use yet
Now it looks like the Silicon Valley giant is increasing Spotify’s troubles in negotiating with record labels. Due to disputes over revenue splits, Spotify has been out of contract with all three big music companies for a while, according to MBW. MBW claims that the music streaming service has been out of contract for over a year with Universal Music Group and that its agreement with Sony Music expired a few months ago. Also Spotify has reportedly been out of contract with Warner Music Group for some months after its contract expired early this year.
This has not had any major effects for the end user yet. The service is currently streaming content from all three major labels with month-to-month contracts. Also it does seem likely that any of the companies will pull their catalogs from the streaming service abruptly, says 9to5 Mac. What should be noted here is that Spotify’s relationship with labels is becoming more strained as it works to increase subscriber numbers with less expensive promo plans.
Will Spotify match Apple?
Apple is supposedly paying publishers 13.5% to 15% of revenue or so, but Spotify is paying more than this, reports 9to5 Mac. In addition, Spotify pays record labels 55% of the revenues, whereas the iPhone maker pays record labels 58%.
Spotify wants to strike long-term deals with record labels at low rates, but the labels want the streaming service to pay as much as the tech giant does. Initially, Spotify was given a “marketing discount;” however, the record labels now want the streaming service to pay what Apple pays. Spotify is arguing that Apple’s revenue share rate applies only after a free three-month trial and that it does not have the spending power of Amazon, Google or Apple.
Nevertheless, despite Spotify’s wish to decrease the percentage paid out in royalties, the major labels and Spotify are still positive about striking a new agreement, reports MBW. Previously, the iPhone maker announced that Apple Music has 15 million active paying users, which is just 50% of the 30 million that Spotify reports having.
Photo by dougbelshaw