Stop us if you’ve heard this one before: Apple wants to launch a new model of paying for music, and major labels are ‘wary’ of the implications. No, you haven’t time-travelled back to the early 2000s and the negotiations ahead of the launch of the iTunes Store, album-unbundling included. What’s causing the wariness in 2019 is the prospect of what the Financial Times describes as a ‘super-bundle of media content’ combining Apple Music with the soon-to-launch Apple TV+ video-streaming service.
“The two sides have not yet discussed a pricing formula, said people familiar with the negotiations. Talks are at an early stage, they added. While some labels are open to the idea, people at one big record company said they had concerns, and that the industry was growing more wary about its relationship with Apple,” reported the FT. “Executives fear that margins may be hurt if Apple undercuts the $10 monthly price that Spotify, Apple Music and others charge.”
First thing’s first: entertainment bundles are already a thing: Spotify’s partnership with Hulu, for example, or Amazon Prime – which arguably fits the moniker ‘super-bundle’ more, since it throws in ebooks and free shipping for online shopping, among other benefits. Neither of those bundles sparked much controversy, although admittedly ‘bundles of music and non-music offerings’ is one of the reasons Spotify cited for its appeal against new Copyright Royalty Board rates in the US, which so enraged publishers.
Still, label caution about the prospect of an Apple entertainment bundle – with all the clout that the company could put behind it through its devices footprint – can be divided into two main concerns. One is that impact on the perceived value of standalone music subscriptions. The other is thornier: how a company offering a combined TV and music bundle (and remember, Apple could add in games and news, with its Apple Arcade and Apple News+ services) would split the revenues with rightsholders / partners for those different content types.
Even a seemingly-simple ‘divide a royalties pool by share of time spent’ calculation is complicated by the fact that music can be streamed while playing games or reading news, if not (usually!) while watching video. It’s already a music-industry conference trope to talk about the attention economy: music competing with YouTube and Netflix and Fortnite (etc) for people’s attention. Entertainment bundles sharpen that competition greatly: how this attention economy is measured will have an even-more direct impact on revenues.
No wonder labels are wary: their stance is less about blocking the prospect of entertainment bundles – if they’re attractive to people, they’ll happen, and on the plus side they could bring people into music-streaming who wouldn’t have paid for a standalone subscription – and more about securing as equitable a piece of the super-bundle pie as possible for music. Bear in mind that given the different modes of listening, watching, playing and reading, deciding what’s ‘equitable’ will be a highly subjective process.
As the FT made clear, the talks are at an early stage: the obvious time to announce a super-bundle, for Apple, would be its WWDC event next June, or perhaps alongside its next hardware launch next autumn, so there is time for those complexities to be fully explored. In the meantime, Apple’s efforts to improve Apple Music continue: a Wired interview with several executives points to Beats 1 shows based on Apple Music’s flagship playlists; more live events (“We never retired the iTunes Festival. We paused it,” said Apple Music boss Oliver Schusser, tellingly); and perhaps more livestreams on the company’s agenda. This stuff is important in the context of the super-bundle debate too: the stickier Apple Music is within an entertainment bundle, the better for the music industry and its artists.