Why Apple Music bundle has record labels worried

Apple’s plans to launch a “super-bundle” of music and video content has come under fire from record labels, who fear their products may be sold at too low a price.

The tech giant has approached music labels over a new subscription model that bundles Apple Music and its upcoming television service together for a monthly rate, the Financial Times reports.

Some companies are “open to the idea”, but the FT claims that “one big record company” has expressed concerns about the bundle. Although pricing has yet to be revealed, the unnamed music firm fears that the subscription could undercut the £9.99 monthly fee that Apple Music and its rival Spotify charge.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Insiders at the record company told the newspaper that the industry was “growing more wary” of Apple, which “strong-armed” the music world into selling individual songs for 99p on iTunes a decade ago.

What’s included in the bundle?

The bundle is rumoured to include the tech giant’s key entertainment packages - including Apple Music and Apple TV+, the upcoming video subscription service that launches on 1 November and is set to rival the likes of Netflix and Amazon Prime.

Independently, those subscriptions come to just under £15 per month, with Apple Music costing £9.99 and Apple TV+ £4.99. Students can access Apple Music for a reduced rate, while customers who buy an iPhone, iPad, iPod Touch, Apple TV box or Mac get one year of Apple TV+ for free.

It’s not yet known whether the £4.99 per month Apple Arcade, the company’s new gaming subscription plan, or the News+ magazine service will be thrown into the bundle, says MacRumors.

Either way, the price of the bundle should undercut the combined total of the two core services “to incentivise customers to subscribe”, the site says.

Why this could be troublesome for music labels

Royalties from streaming services have “helped propel labels to some of their best growth in years”, CNet claims. But the industry is “still licking its wounds” from the early years of online music sales, when profits were “savaged” by file-sharing sites and later by the likes of iTunes, where margins were “much tighter” than CD sales.

Some industry figures allegedly blame Apple’s iTunes model for profits lost during the dawn of downloadable music, from which the music world has “only now started recovering”, the tech site says.

While the move to a subscription model may scare some within the industry, as buyers pay the equivalent of two albums per month for unlimited access to music, Apple’s business model currently prevents it from becoming an audio juggernaut.

That’s because Apple owns the rights to the content broadcast through its TV app, while it has to license music from record labels, the FT says. This means the firm can bundle the two services together, cutting the price from its TV+ model “without compelling music rights holders to offer a discount”.

Analysts told the paper that, ultimately, Apple is “more interested in building a huge number of subscribers than in short-term profit”.