According to a new report from DMN Pro, at least from a legal perspective, there are few obstacles stopping Apple Music from joining Spotify and becoming a “complete package.” Photo credit: Mariia Shalabaieva
Will Apple Music “do like Spotify” by reclassifying all its subscriptions as bundles? Thanks to Apple Music Classical, the move to reduce royalties would be an easy one to take.
DMN Pro’s latest weekly report explores that little-discussed possibility and other important components of bundles in the contemporary streaming landscape. By now, many are aware of Spotify’s unilateral shift toward bundled offerings, which, under the terms of the Phonorecords IV ruling, are subject to different mechanical royalty calculations than standalone plans.
In short, that means Spotify, to the frustration of the NMPA and others, is about to pay (music) publishers a lot less. Despite the decidedly aggressive embrace of bundling, the platform is not alone in taking advantage of the royalty-specific and other benefits of multi-product bundles.
A clear majority of YouTube Music’s paid users access the service through plans classified as bundles for royalty calculation purposes, DMN found by analyzing fully verified publisher filings. (This and other details about bundle participation in the US are compiled in a unique database available exclusively to Pro subscribers.)
And Apple, which continues to push Apple One, is also leveraging bundles that include its music service. But what if Apple Music followed in Spotify’s footsteps and took its commitment to music bundles to the next level?
While the issue is certain to take center stage during Phonorecords V negotiations, at least from a legal perspective, there’s seemingly nothing stopping Apple from jumping in immediately. More urgently, the company could probably make a better case than Spotify to justify its “bundles.”
Spotify undoubtedly only laid the groundwork for the bundle bonanza by adding 15 monthly hours of audiobook access to its core plans, and subsequently debuting an “audiobooks-only” tier with the same components but without the ever-important music. As Mechanical Licensing Collective noted in its lawsuit (and as was still the case when we initially covered the suit), Spotify’s audiobook plan, somewhat surprisingly, provided full access to music for a time.
On the other hand, Apple Music Classical launched in late March 2023. Unlike Spotify’s audiobook plan, Classical is a standalone app offered to Apple Music subscribers at no additional cost. However, if a standalone Classical plan with a lower price were to materialize (and, to put it bluntly, the maneuver wouldn’t require too much effort), Apple Music could get in on the bundling action as well.
To date, there has been no concrete indication that Apple Music will adopt a rights-bundling approach. The negotiating advantages of its current position, plus the advantage of avoiding numerous criticisms and maintaining strong relationships with rights holders for various collaborations, are presumably more than worth the considerable tranche of potential savings.
Still, it’s worth keeping in mind that the option is only available to Apple Music, which classified nearly 92 percent of its individual subscriptions as non-bundles in February of this year, according to DMN Pro’s calculations.
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