Apple Still Negotiating With Sony and Warner Over iRadio Royalties

itunes_radio_round_iconApple is still in negotiations with Sony and Warner over its iRadio streaming music service, reports the Financial Times. Apple had offered roughly 6 cents per 100 tracks streamed, but later reportedly raised this to 12.5 cents per 100 tracks -- similar to the rate paid by Pandora.

Although the company has reached an agreement with Universal Music, the largest record label, the FT claims other labels are still looking for better terms. Apple is reportedly working hard at reaching a deal and wishes to launch the 'iRadio' service at some point this summer, perhaps at WWDC in June.

Some music industry executives argue that cash-rich Apple should pay a higher rate than Pandora, which had 70m "active listeners" in April, because of its broader ambitions for iRadio. These include using data it already has from hundreds of millions of iTunes users to predict the selection of tracks they will enjoy, and a plan to allow listeners to purchase songs seamlessly via the iTunes store.

The people familiar with the terms said that Apple was offering labels three tranches of revenue: a royalty per track streamed, a share of iRadio’s advertising revenue and a guaranteed minimum sum over the course of the contract that would provide a safety net in case the number of plays or amount of advertising sold disappoints.

The FT notes that Apple is intentionally not launching an on-demand service like Spotify in order to avoid cannibalizing purchases from its iTunes Music Store. Instead, the iRadio service will allow customers to discover new music and likely direct listeners to the iTunes Store to buy music they enjoy.

Top Rated Comments

aheying7 Avatar
108 months ago
As a high school student, I can say everyone I know quit using iTunes and uses Spotify exclusively now. That's what Apple needs to compete with, NOT Pandora. In other words, you should always be able to pick the song like Spotify.
Score: 8 Votes (Like | Disagree)
extradryny Avatar
108 months ago
Apple is intentionally not launching an on-demand service like Spotify in order to avoid cannibalizing purchases from its iTunes Music Store. Instead, the iRadio service will allow customers to discover new music and likely direct listeners to the iTunes Store to buy music they enjoy.

Tim Cook, 1/23/13:

“I see cannibalization as a huge opportunity for us,” Cook said Wednesday. “Our core philosophy is to never fear cannibalization. If we don’t do it, someone else will."
Score: 7 Votes (Like | Disagree)
ChadMobley Avatar
108 months ago
If it isn't one company that's greedy, it's another...how about being pro consumer for once! Without us, these companies are no where.
Score: 6 Votes (Like | Disagree)
foobarbaz Avatar
108 months ago
Some music industry executives argue that cash-rich Apple should pay a higher rate [...] because of its broader ambitions [...] and a plan to allow listeners to purchase songs seamlessly via the iTunes store.

Charge Apple more because they might bring in additional revenue. The music industry doing it what it does best.
Score: 4 Votes (Like | Disagree)
vannibombonato Avatar
108 months ago
Right in the short term, wrong in the long one

I believe it's the first time "i miss Steve".
With the Pandora-like agreement Apple is doing exactly what a Microsfot would do: go where the money is, not where it will be.

Consumers want to have Spotify-like service, and in the end the consumer always win. If Apple doesn't do it, someone else will.

We had complete albums, then iTunes revolutionized the industry with the capability of purchasing single tracks, now Spotify and the likes revolutionize it again with their service, wich is plain better (for 90% of consumers) than purchasing music in iTunes.

I'm not using iTunes since one year, and so is any of my friends who had a chance to try Spotify. They couldn't believe it costed 10$ per month, just as i couldn't believe a song could cost 1$.

Apple should go where the consumers want to be lead, and do it better than competitors. It pays in the long run. The right thing to do is to satisfy and surprise consumers, not one-year forecast of share value.
Why on earth should i ever purchase a song that i listened from "iRadio" for 10% of what i pay to Spotify monthly to listen to it wherever i want whenever i want on whicherever device i want, all perfectly synced, is beyond my mind. And boy, yes i'm an Apple fan.
Trying to go against the tide, against what is better for consumer, might be good for iTunes sales for the next 2 years, but plainly wrong in the long run.

Purchase spotify, integrate it with your ecosystem, make it better rename it and re-invent the music industry again.
Score: 3 Votes (Like | Disagree)
TC03 Avatar
108 months ago
I think Spotify (or other services alike) are the future. Still, I do see why Apple won't cannabalize the iTunes store.
Score: 3 Votes (Like | Disagree)

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