Bloomberg reports this evening that Apple has secured a new deal with Warner Music Group for Apple Music. The deal is Apple’s first since introducing Apple Music two years ago, while the company hopes it will set precedent for future negotiations with other labels.
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Today’s report explains that Warner will provide Apple with a catalog including recent stars like Ed Sheeran and Bruno Mars, as well as older artists such as the Red Hot Chili Peppers, for both the iTunes Store and Apple Music. The deal will see Apple pay Warner a smaller percentage of sales from Apple Music subscribers than its original deal did.
Apple could face backlash from artists for paying less per stream under this new deal, especially if the same cut extends to deals with other record companies.
Bloomberg explains that Apple is able to negotiate more freely with music industry powerhouses than competitors like Spotify and Pandora are because it doesn’t offer a free streaming tier like those services do. Thus, companies are willing to give a bit more when negotiating with Apple than with Spotify and Pandora.
Apple hopes that this deal will help it move forward in talks with other music companies like Sony and Universal:
Talks between Apple and the music industry are seldom as acrimonious as those including most other music services. While YouTube, Spotify, Pandora and other services allow people to listen to music for free, Apple only sells a paid on-demand service.
Warner Music Group is the first major music company to reach new, long-term deals with all three of the biggest players in music, Apple, YouTube and Spotify. Universal and Sony have agreements with Spotify, but have yet to sign new deals with YouTube and Apple. Warner hired former Sony executive Ole Obermann to oversee its digital business last November.
Apple initially faced backlash because of its decision not to pay artists during Apple Music’s free trial period, but it later revised that contingency because of artist complaints.