After the loss of artists and the "forced" decision to have to lower the quota of its family plan, now Spotify faces a new problem.
Record companies require Spotify to pay at least the same amount for song rights that Apple pays. And it seems that Apple spends a lot of money for it.
Spotify Vs. Apple Music: the war rages on
The battle between Spotify and Apple Music officially started a little over a year ago, on June 30, 2015 when the Cupertino company launched its music streaming service. During this time, different movements by Apple Music have intensified the battle.
Price
The first of these was one of the most basic strategies: price. Although the individual subscription to Apple Music has the same cost as in Spotify, € 9,99 per month, the apple family plan was twice as better. Apple Music offers a family account that supports up to six members who can use the service completely independently for only € 14,99 per month. The same, it cost twice on Spotify. Thus, the green service had no choice but modify your family plan shortly after.
An option that artists do not like
Another contest that Spotify has to fight every day is its free option in exchange for advertising. This is not liked by record companies, but much less by artists. They feel that the feeling can be conveyed that their work is free, that it is worth nothing financially. Thus, many artists refuse to be present on Spotify as long as the service maintains this modality. Apple Music is not free by any means. Either you pay, or nothing, and this arouses the sympathies of the artists.
Exclusives policy
Third problem: the exclusives. Apple Music has opted for the policy of exclusivity. During its first year of life, it has made many exclusive releases from very popular artists that attract subscribers to its service.
With all this, Apple Music has achieved what many doubted (we doubted), stand up to the most popular and used music streaming service in the world. In the absence of more up-to-date figures, The apple service has already surpassed, in just one year, half of the paid subscribers that Spotify has. We talk about more than 15 million listeners that month after month they religiously pay their fee, compared to 30 million on Spotify.
A difficult negotiation
But now Spotify faces a problem that could be much more serious than the previous ones. The service has to renew contracts with record companies and they require, at least, the same amount that Apple Music pays. The contracts with Universal Music Group, Warner Music Group and Sony Music Group have already expired, and this puts a lot of content at risk.
According to has reported MusicBusinessWorldwide, The high fees Apple pays on its rights contracts with record labels is making it difficult to renew Spotify contracts with these.
While Spotify is committed to reaching long-term agreements that allow it to pay lower rates, the record companies want the service equal to the amounts paid by Apple.
Apparently Spotify pays record labels 55 percent of its revenue, while Apple Music raises that amount to 58 percent.. Furthermore, Apple Music is said to also pay publishers more than Spotify.
The green company is trying one last push to make its business more profitable, and although it had a "marketing discount," now the record companies who else.
Spotify argues in its defense that the fee paid by Apple only applies after the three-month free trial period. Along with that, remember the pitiful but true argument that she does not have the purchasing power that Apple Music, Amazon or Google, its main competitors, which have a large user base and other sources of income, enjoy.
There will be agreement
According to MBW sources, the negotiations remain "optimistic". The "likely outcome" is that Spotify reaches a license agreement similar to the one it has had in recent years. But this agreement has not yet been reached.
One of the formulas considered by Spotify would be to limit temporarily exclusive releases only to paying users, so that record companies accept a lower rate. On the other hand, it is unlikely that the top three sellers will withdraw their music from Spotify, the even more popular platform, and thus stop receiving the 55% that it pays them.
