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Apple Caves on Streaming Music Royalty Rates, First Deal to Be Signed Next Week

itunes_radio_round_iconThe Verge is reporting that Apple is set to strike a licensing deal with Universal Music Group, the largest music label, by next week for its rumored Internet radio service. A deal with Warner Music would follow soon after that, according to The Verge.

Last week, it was reported that Apple was close to wrapping a deal up with Universal Music Group and Warner Music, but no immediate time table was given and it was unclear if any side made concessions on royalty rates.

In early March the New York Post said that one of the sticking points in the negotiations with the labels was that Apple was offering to pay half the royalty rate of Pandora, which was $0.06 per 100 songs streamed. The Verge says that Apple did not succeed in trying to undercut Pandora's rates.
Now, Apple will pay rates nearly "neck and neck" with Pandora, one of the sources said. Because of iTunes huge number of users, the new service is expected to be an immediate threat to Pandora.
The Pandora-like service is supposed to launch later this year and is set up to help iTunes users discover new music, generate ad sales and boost sales of downloads, according to The Verge.

However, Apple still has to strike a deal with Sony Music Entertainment and music publishers, and talks with those companies are said to not be as far along as Universal Music Group and Warner Music. If Apple is able to agree to a deal with Sony in the next couple months, it could possibly debut iRadio at Worldwide Developers Conference this June.

Top Rated Comments

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19 months ago
Spotify-Like > Pandora-Like
Rating: 12 Votes
19 months ago
First time I've heard of Apple backing down on such an extreme deal.
Rating: 8 Votes
19 months ago
Don't forget Apple's advantage in this: its content is not required to make money. Sure it does now, but Apple can afford even to lose money on iRadio, so long as overall its content deals break even. For Apple, content exists solely to sell hardware. That gives it the advantage over companies like Pandora and Spotify: they are finding it hard to make money at current royalty rates, Apple doesn't need to. It doesn't even need to play ads during streaming like the free versions of its competitors, I bet the most it will do is use iAd to show them on the screen: much less intrusive than audio ads.
Rating: 7 Votes
19 months ago
All together now: "Steve would never have caved!"
Rating: 7 Votes
19 months ago
It looks like Apple needs the music labels a WHOLE lot more than the music labels need Apple.
Rating: 4 Votes
19 months ago
It'd be cool if the songs you "liked" could be saved locally on your device and available for purchase when you aren't connected anymore. That would make good use of that patent that was on here a few days ago.
Rating: 3 Votes
19 months ago
I just don't know what this is for. I played with Pandora for about a week and got over it when I ran out of "skips". I don't think I ever bought anything.

How many people will want to burn up their data plans for this? I know broadcast radio sucks, but there are college/indie stations that are a free and constant source of new material.
Rating: 3 Votes
19 months ago

First time I've heard of Apple backing down on such an extreme deal.


And it could all be total BS. that they are trying to remake Pandora etc. that they demanded lower royalties, that they backed down

We will never know such details as fact, just rumor
Rating: 3 Votes
19 months ago

Who the he// do these music labels think they are?!?!

Their greed is astounding!


They are the ones with the bat..... and the ball.
Rating: 3 Votes
19 months ago
Hopefully it will allow uncensored songs

Itunes match still often gives me the edited version of songs I try to play. If anyone has a fix I'd be interested in hearing
Rating: 3 Votes

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