Apple music service Music can be squeezed out of the market and to bankrupt rival Spotify, warn analysts polled by The Financial Times. The Swedish company is not able to compete with the U.S. at the rate of licence fees for broadcasting music tracks.
“One of the threats to Spotify Apple is paying the music industry. This could be a disaster for investors Spotify,” writes The Financial Times. According to the licensing agreements between Spotify and the holders of the rights to musical compositions, the service allocates the majors 70% of the revenues from the broadcast of their compositions. Last week Apple declared readiness to pay 73%.
Earlier Apple has changed the policy for payment of royalties to the musicians for playing their music in the period of free operation of the Apple Music service. Initially it was assumed that in the first three months of operation the service will be free for users in the future, the fee will be $10 per month. Payments to holders of the rights to the music Apple was going to start with the introduction of fees for the use of the resource. But the Corporation has agreed to pay immediately after the announcement of the singer Taylor swift, who called Apple’s decision not to pay the musicians are not relevant “to Apple’s reputation as a generous and progressive company.”
“It was a very smart and dangerous to Spotify decision,” says Jeremy silver, consultant digital media at Media Clarity. Record companies will now be able to dictate terms to Spotify because of the presence of Apple, he warned. The newspaper’s source close to Spotify, retorted that the labels, in contrast, are interested in the development of the service as an alternative to the dominance of Apple and Google.
Official representatives of Apple and Spotify declined to comment.