The promise of a streaming iTunes library is still on the horizon, reportedly coming to us during WWDC later this year. The idea is simple: take iTunes, and open it up for streaming. The actual execution isn’t so easy. Apple has to re-negotiate existing distribution contracts with record labels to get them to allow for streaming. We’d once heard Apple was aiming for a $7.99 price point for streaming, but a new report says record labels aren’t going for it; they want Apple to charge $10 or more, monthly.
The change in thinking about streaming cost comes after Rob Wells, President of Digital at Universal, left the company in February. He brokered a major deal with Spotify, which we now know may not be favored in the music industry. According to sourced, Universal is now rethinking their streaming strategy.
This change in attitude could affect both ‘freemium’ streaming and paid. In negotiating for more industry-standard rates for iTunes’ streaming option, record labels may also look to distance themselves from a free-tier option, where the thinking was free plays lead to paid streaming — which then leads to a revenue stream for labels.
Sources claim Apple was vying for a $7.99 price point, but are backing down from that stance. Now, Apple is reportedly aiming to meet record labels at a $9.99/month fee, which is pretty standard industry pricing. They’re also likely getting away from any kind of free streaming option with this new service.
At $9.99, Apple could have a monster on their hands. Should they be able to open up the entire iTunes catalog for streaming, expect everyone to pull up anchor and head to that service instead. If that happens, labels could start examining their existing relationships with other services — especially those who allow for free streaming — a bit more closely.