Record labels balked at Apple's plan to undercut Spotify
Apple had hoped to cut the cost of on-demand music streaming below Spotify's $10/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 $7.99/month after record labels said it would have to absorb the cost of anything below $9.99.
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.