Apple proposing half Pandora's royalty rate for streaming
updated 01:09 pm EST, Thu March 7, 2013
Record labels balking at Apple offer, report says
As an initial offer to a record label for a forthcoming streaming service, Apple recently proposed a royalty rate of just 6 cents per 100 songs, sources for the New York Post claim. "Apple wants a rate that is lower than Pandora's," one executive is quoted as saying. Pandora pays labels 12 cents per 100 songs, which itself is below the Copyright Royalty Board's standard 21 cents for digital-only streaming. Spotify pays 35 cents, according to the Post's sources.
Apple's lowball demands have reportedly led to rejection by multiple labels. An Apple "iRadio" service has been rumored for some time; the sources say, though, that the company was most recently hoping to launch the service alongside the iPhone 5, but couldn't secure deals in time. Apple's main negotiator for music, Eddy Cue, initially tried to secure an arrangement from Sony/ATV, but the company's resistance forced it to talk to the major labels, Universal, Sony, and Warner. "Everyone’s had their initial meetings and everyone is preparing counters," one source says.
It's said that Apple may be considering bundling iRadio alongside iTunes Match. Match is designed to be a convenient way of backing up a person's music library, regardless of whether content was bought on iTunes, and making it accessible on multiple devices.
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Even with paying half the royalties of Pandora the record labels would probably make more money on an Apple streaming service than other existing services. They just aren't that popular. Pandora is juggling its business model and putting caps on the vast majority of its users who are freetards with no intention of paying for the service. Just like the 99¢ model Jobs negotiated for iTunes the labels will make a bundle going with Apple.