Record labels balked at Apple's plan to undercut Spotify

Eddy Cue AppleAPEddy Cue, Apple’s SVP of Internet Software and Services, has been in talks with record labels.

Apple had hoped to cut the cost of on-demand music streaming below Spotify’s $US10/month price point, but record labels may make that impossible, according to a Billboard report.

Apple’s service is based on Beats Music, which it acquired last year.

The thinking is Apple could quickly grow its streaming service — which will be rebranded as part of iTunes — if it can offer the same content as its competitors at a lower price.

But Apple reportedly decided not to offer its service at $US7.99/month after record labels said it would have to absorb the cost of anything below $US9.99.

The iPhone maker has also abandoned a freemium model and will only offer a paid service.

Apple’s inability to compete on price may actually be a good thing, though. Without a price advantage Apple will have to compete on content and features, which is a boon for people who love music.

Apple is expected to unveil its music service at its developer conference in June.

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