Apple Music could potentially follow Spotify's strategy of reclassifying all subscriptions as bundles, primarily due to its existing Apple Music Classical service. This move would allow Apple to significantly reduce mechanical royalty payments under the Phonorecords IV determination.

Key findings from the DMN Pro report:

• Apple Music could leverage Apple Music Classical to justify bundle reclassification
• Currently, 92% of Apple Music Individual subscriptions are classified as non-bundles
• The company already offers bundles through Apple One
• Legal barriers appear minimal for implementing this change

Unlike Spotify's approach of adding audiobook access, Apple has a more legitimate bundling case with its separate Classical app, which launched in March 2023. While currently free for Apple Music subscribers, introducing a separate Classical plan could facilitate the bundle classification.

Competition Analysis:

• YouTube Music: Majority of paid users already access through bundles
• Spotify: Successfully implemented bundling through audiobook integration
• Apple Music: Currently maintains traditional subscription model

Despite the potential for significant cost savings, Apple Music shows no immediate signs of pursuing this strategy. The company appears to value its current industry relationships and negotiating position over potential royalty reductions.

This situation highlights the evolving landscape of music streaming economics, with bundling emerging as a key strategy for reducing royalty obligations while maintaining service offerings.

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