Apple had hoped to offer its premium streaming music subscription for $8/£8 per month - crucially under-cutting the $10/£10 per month charged by the existing big players, such as Deezer, Rdio and Spotify.
The New York Times reports that Apple has failed to persuade record labels to agree to this cheaper price, suggesting Apple isn't as strong as it once was in the digital music market, as it prepares to join a relatively mature streaming market.
In another victory for the labels, it's also suggested the Apple music subscription service won't offer a free tier. Rival services, such as Spotify, allow access to a more basic version of the service for free, aiming to use this as a hook to get users to sign-up for a paid subscription.
Various record label executives have begun to complain about the amount of music that's available for free, with the free tiers of subscription streaming services being very much in their sights. It seems Apple has heeded these complaints and won't offer a free tier.
Apple's streaming music service is expected to be launched at WWDC in June, and will likely see a revamped version of Beats Music's streaming service integrated in to the new version of iOS, possibly as part of a new-look iTunes.
Jimmy Iovine and Trent Reznor, who moved to Apple following the $3 billion Beats acquisition, are said to be leading the development of the new streaming service.
Apple recently hired Zane Lowe from BBC Radio 1, a move seen by many as part of a strategy to focus on curated playlists and editorial content in its new service, something that new services such as Tidal have also focused on.
Rumours of Apple launching a higher-quality music service have been around since 2011, but it remains to be seen whether Apple will adopt lossless streaming at launch.
The official announcement is tipped to take place at Apple's WorldWide Developers Conference, which is likely to take place in June.