By this time next month, Apple will officially be offering four major subscription services of its own — Apple Music, Apple News+, Apple Arcade, and Apple TV+ — and yet despite many rumours and suggestions earlier this year that the company was going to bundle some or all of them at a single fixed monthly price, that didn’t materialize, and right now they’re still completely separate “a la carte” services.
According to a new report from the Financial Times, however, it seems that the lack of a single-price bundle isn’t because Apple doesn’t want to do it, but rather unsurprisingly due to opposition from the music industry.
In fact, Apple very much wants to create a “super-bundle of media content,” but at least some record labels aren’t buying into the idea out of fears that this would result in less revenue for them if Apple Music were effectively being sold for a lower monthly price as part of a bundle.
Music, Movies, and TV
Apple has reportedly approached the big music companies already about bundling together Apple Music and Apple TV+ specifically, since these two services have the most natural relationship, and would be the best fit for a bundle.
Sources familiar with the discussions told the Financial Times that talks are still at an early stage and the two sides have not yet even discussed a pricing formula yet, but some music executives are already fearing their profit margins will be hit if Apple’s new bundle undercuts the $10 monthly price tag that has now become standard for almost all music streaming services, including Apple Music and Spotify.
Unlike Netflix, Apple owns all of the rights to everything that will be shown on Apple TV+ when it launches next month, and therefore doesn’t need to negotiate with anybody for video content — something that makes us wonder if this was another factor behind Apple’s choice to rely exclusively on its own original content for its new movie and television streaming service.
When it comes to music, however, Apple is at the mercy of the record labels and whatever licensing agreements it can work out. The vast majority of the $10/month that Apple collects from Apple Music subscribers — over $7/month — goes right back to the record labels, so it’s easy to see how a reduced-price bundle would impact these numbers.
Of course, if it came right down to it, Apple could offer a slightly discounted bundle — perhaps $13/month for both Apple TV+ and Apple Music — and take the hit entirely on the Apple TV+ side. Not only does Apple not have to share revenue from its original content with anybody else, but it’s already shown a willingness to give it away, offering free one-year subscriptions to anybody who buys a new iPhone, iPad, Mac, or Apple TV.
This may be even more feasible considering that most analysts believe Apple is more concerned with building a huge subscriber base than it is in short-term profit, and it also makes sense that Apple will want to demonstrate to its current and potential Hollywood partners that it can build a massive audience.
Labels Felt ‘Strong-Armed’
Despite the changing landscape and the rise to dominance of competing streaming services, music executives remain wary about their relationship with Apple, which they feel “strong-armed” them 15 years ago when Steve Jobs convinced them to accept a standardized $0.99 per track to sell their music on iTunes.
Although Apple has positioned itself as a “friendlier partner” in the modern streaming era, at least some music industry executives are still nursing old wounds, despite the fact that Apple repeatedly offers better streaming terms than its chief rival, Spotify, which is said to be more “contentious” in dealing with record labels.
Although the talks so far only seem to be focusing on Apple Music and Apple TV+, it’s likely that Apple could offer higher-priced bundles that would include Apple News+ and Apple Arcade at higher price levels.
Apple Arcade would likely be an easy inclusion for the same reason as Apple TV+; while it’s not clear exactly what Apple’s financial arrangements with developers are, it appears that the company is funding developers up front and thereby doesn’t have to deal with any revenue-sharing arrangements that would affect its pricing model.
On the other hand, while magazine publishers have been enthusiastic about Apple News+, the company has had a somewhat difficult arrangement with news publishers, which might result in it having to engage in a whole separate round of negotiations with the publishing industry that could make things even more complicated.