Apple Reportedly Forced to Abandon $7.99 Music Streaming Service

Last week, it was reported that Apple is close to launching a new music streaming service that is powered by Beats, the company that Apple acquired last year. What is interesting about the report is the purported $7.99 per month subscription price—much cheaper than the $9.99 price tag that other services such as Spotify are offering. If the plan is realized, it will represent a huge win for Apple as it would clearly undercut the competition.

But hold your horses. Sources in the record industry told Billboard that Apple’s upcoming subscription service, which is expected to debut in June, will abandon the $7.99 pricing because the labels won’t allow it. And, if Apple decides to continue, it will have to “absorb the loss” for lowering the price from $9.99 to $7.99, sources added.

Record labels including Universal Music Group are rethinking the value of unlimited free streaming, a model that Spotify is advocating. Although Spotify contends that its strategy will reduce music piracy, music artists like Taylor Swift and Bjork are asking the company to be more transparent in its licensing terms. Now, record labels are questioning the “freemium” model.  

Additionally, Apple is believed to be negotiating with artists and labels about the exclusives of the music service, which is expected to carry the iTunes brand. However, sources are saying that it is still unclear if Apple will integrate iTunes Radio into the said service. What is clear, though, is Apple’s confidence that it can outwit the competition. Sources told Billboard that Apple will offer enough value on its music service that consumers will be willing to pay for it.