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Apple asks music labels for price cut on streaming subscriptions

Apple logo and stop sign, New York.
Scott Mlyn | CNBC

There are lots of music subscription services that let people listen to all the songs they want for $10 a month.

Apple thinks that price is too high.

Sources say Apple is talking to the big music labels about a new set of rights and features it would like to include in a revamped version of the Beats Music service it bought earlier this year. Among the things Apple wants is a new pricing structure that would allow it to sell the service for less than the $10 level it's at now.

Read More Apple welcomes Beats after deal's completion

Discussions are in their early stages, sources say, and Apple isn't planning on overhauling Beats Music until next year. Last month Apple said a TechCrunch report that the company was planning to "shut down" Beats was not true. But people familiar with the company's thinking said it might alter the service over time.

Apple spokesman Tom Neumayr declined to comment.

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Getting the labels to sign off on a price cut will require some work on Apple's part. After initially resisting the notion of subscriptions, in part because they worried all-you-can-eat services would cut down on CD and download sales, music executives eventually agreed to let services like Rhapsody, Spotify and most recently Beats offer all-you-can-stream services for $10 a month.

Now download sales are indeed dropping, while revenue from streaming services is picking up. But it's unclear how much of the download decline should be attributed to subscription services like Spotify and Beats, and how much of it stems from the use of free services like YouTube, Pandora and even Apple's own iTunes Radio.

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Meanwhile many music industry observers believe there is a limited pool of consumers willing to pay $10 a month to rent music — especially since few people spent that much money on music during the CD era.

Spotify, the world's biggest on-demand subscription service, says it has more than 10 million paying users. But a recent survey suggested that only 25 percent of music streamers spent more than $10 on music every three months.

—By Peter Kafka, Re/ Additional reporting by Dawn Chmielewski.

CNBC's parent NBC Universal is an investor in Re/code's parent Revere Digital, and the companies have a content-sharing arrangement.

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