Reports indicate that Apple Music’s licensing agreement with record label Warner Music Group has been renewed. The deal will allow the iPhone maker to continue selling and streaming Warner Music’s catalog via Apple Music. While Warner Music Group will receive a certain percentage of music sales made on Apple Music, the revenue share is lower this time compared to the previous contract which was signed some years back.

For a long time now the relationship between digital marketplace owners which provide downloads as well as streaming to customers and music labels has been contentious. This is because record labels generated far more revenues from traditional physical media such as CDs compared to what they are getting from digital sales.

Digital marketplaces

Among the various digital marketplaces Apple has been the favorite since it doesn’t provide free online streaming services and thus requires its customers to subscribe at a monthly fee of $9.99 or purchase songs in order to access content contained on its platform. Some of the revenue that Apple is able to generate from these services is reserved for labels.

The labels, however, don’t have much choice these days as online streaming has become the preferred method with regards to access and consumption of music. Through services such as Spotify, Pandora, and Apple Music, millions around the world are choosing to stream music to their devices instead of purchasing individual tracks and downloading them.

Royalty rates

According to sources record labels have been receiving 58% on the sales that Apple Music makes. This is higher than the 55% that Spotify, Apple Music’s chief competitor, had been paying record labels. It is understood that Spotify negotiated the percentage downwards to 52% earlier in the year. Apple consequently has been pushing for a reduction as well and it is understood that the Cupertino, California-based tech giant is ready to pay 55%.

Besides Warner Music Group Apple is also said to be holding talks on royalty rates with Sony Music. A deal is expected to be reached in the near future. Apple is also said to be negotiating with Universal Music though in this case a deal is not expected anytime soon.