Apple Music’s arrival put a dent in download revenue

Apple has $205 billion-plus cash on hand, but the struggling music labels gave its nascent subscription streaming service Apple Music a big financial break.

Universal Music owner Vivendi admitted as much during its earnings call on Wednesday. Digital recorded revenue is up year-on-year in the third quarter, but it fell by $18 million versus the preceding quarter.

The labels (along with their artists) all accepted a reduced royalty rate to help Apple Music get established with a free three-month introductory rate.

Apple Music’s arrival put a dent in download revenue — off 8 percent in the quarter.

Vivendi management also warned on its growth prospects, describing 2016 and 2017 as “transformational” years of heavy investment in digital media companies. That news sent the stock down the most in three years.

Hervé Philippe, Vivendi’s chief financial officer, told analysts, “The decline is due to a fall in downloads in the third quarter, especially due to the launch of Apple Music.”

Had Taylor Swift not written Apple that letter demanding payment for all artists, and had the independent labels not made a stink about being asked to provide music for free to one of the most profitable companies on the planet, one wonders how much worse things could look.

Meanwhile, Apple said Friday it is dumping the Beats Music service and hoping subscribers will join Apple Music. Beats Music reaches the end of the line at the end of the month.