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.

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Top Rated Comments

basesloaded190 Avatar
147 months ago
Spotify-Like > Pandora-Like
Score: 12 Votes (Like | Disagree)
TheShinyMac Avatar
147 months ago
First time I've heard of Apple backing down on such an extreme deal.
Score: 8 Votes (Like | Disagree)
camnchar Avatar
147 months ago
All together now: "Steve would never have caved!"
Score: 7 Votes (Like | Disagree)
fruitpunch.ben Avatar
147 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.
Score: 7 Votes (Like | Disagree)
iGrip Avatar
147 months ago
It looks like Apple needs the music labels a WHOLE lot more than the music labels need Apple.
Score: 4 Votes (Like | Disagree)
furqan8421 Avatar
147 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
Score: 3 Votes (Like | Disagree)