Music labels, hell-bent to “bring booty back” to the industry, are hoping to convince Apple to hand over an unusually large slice of the monthly subscription fees from its soon-to-arrive paid streaming service, The Post has learned.
Music’s top negotiators are looking for anywhere between 60 percent and 70 percent of Apple’s expected $10 per month subscriber fees, industry sources said.
That is much higher than the roughly 50 percent cut the major labels get from other paid streaming services — though Spotify may be facing a price hike after ongoing talks with Universal Music for a new deal are completed.
Overall, music labels receive 46 percent of the paid subscription streaming revenue, after tax, according toMusic Business World, which cites an Ernst & Young report.
The labels’ tough stance comes as they try to recover from what they believe were missed opportunities at revenue.
“It’s the last chance to get it right,” said one music source of the negotiations with Apple. “We had vinyl, cassettes, downloads, now streaming. This is it.”
Most believe that streaming will be the last format change for the business and that Apple will be critical in contributing meaningful revenue change for the music industry.
The pressure from the labels comes as Apple — without a single agreement in hand — races to get deals in place before its June 8 developers’ conference — where it hopes to announce Apple Music.
Total revenue from subscription music streaming services is expected to hit $1.6 billion in North America by the end of 2016, according to an analysis by Bank of America.
Meanwhile. revenue from downloads is expected to slide from $2.5 billion in 2012 to $1.55 billion by Dec. 31, 2016.
While the labels are playing hardball with Apple, they remain confident that Tim Cook’s tech giant will take streaming music from a niche business to the masses — and that the revenue stream will be robust.
The Cupertino, Calif., company is set to give Apple Music a huge blast-off in June, sources said, with a possible three-month free trial period.
“They’re going to point all the resources of the company towards promoting Apple Music,” said one person familiar with Apple’s plans. “It’s going to be akin to the iPod launch.”
As for Apple’s current lack of any music rights, one insider wasn’t that worried.
“That can all change with one phone call,” said the source, who believes deals will be completed in time for Apple to launch the product.
While Apple’s negotiations continue to be spearheaded by Senior Vice President Eddy Cue, the successful relaunch of Apple Music is the responsibility of Jimmy Iovine, who was hired by Apple from Interscope Records to catapult Apple into the paid streaming music business.
Apple didn’t immediately comment. Reps for the labels declined comment.