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Report: Apple pushing to get 'iRadio' going this summer

updated 08:00 pm EDT, Fri March 29, 2013

Service would offer streaming, customized music, buy buttons

Music industry executives are evidently not good at keeping secrets -- a number of them have gone on the record talking about Apple's proposed streaming "radio-like" service, currently dubbed "iRadio," and some details behind it. Following an apparent breakthrough in negotiations with Universal and Warner, the company is pushing to get the service launched sometime this summer, according to reports. Likely to be incorporated or at least tied to the iTunes Store, "iRadio's" main sticking point so far has been royalty rates.

The fundamental problem is that rates are not consistent around the industry. The largest service for streaming music, Pandora, pays about 12 cents for every 100 streaming songs. However, the fast-growing service Spotify pays about 36 cents per 100 songs -- while broadcasters who also stream online pay about 21 cents. Rumors had said that Apple initially low-balled its proposed rate even below Pandora, but details on what rate the company ended up getting has not been revealed, says The Verge.

Apple may feel justified in getting a lower rate than others because of the considerable additional benefits it brings to the table. Unlike most of its competitors, Apple has more than 400 million accounts with credit cards on file, the largest music catalog available anywhere, an enormous base of daily users, a complete mobile and desktop ecosystem, and the commerce infrastructure to easily allow listeners to buy songs they hear and like. Should the company launch a service of the same quality as Pandora or Spotify, it would likely become the industry leader almost overnight -- and has a consistent and proven track record of enriching the music companies and artists who use its service.

Details of how the service would work are scarce, still. Rumors have spoken of a "curated" premium radio service along the lines of Radio Paradise or SomaFM that showcased promoted acts, or an analysis-based service that would deliver new artists similar to those in the listener's iTunes library (an approach that would offer results similar to what Pandora offers). Another option for the company is to offer listeners the keys to the entire iTunes inventory in streaming form -- a more extensive version of Spotify or Rdio. While Apple has maintained radio silence on the alleged "iRadio," it has been known to have spoken to music industry executives about the idea and consulted with subscription-radio advocates such as Beats headphone CEO and record company head Jimmy Iovine.

Unused "Radio Buy" buttons were also discovered in the iOS 6.1 update, further lending credibility to the idea that iTunes or perhaps a separate app tied to the iTunes Store would offer streaming music listeners the chance to buy a song they heard. Apple has recently been on a bent to increase the "discovery" abilities of its various stores, buying app-discovery service Chomp last year and incorporating its technology into the store, along with "others bought" and "similar artists" recommendations in the music and video sections.

Still unanswered is whether the service will be offered for free or will be a paid-for premium service, like iTunes Match. The latter, a $25 per year "virtual locker" for music that stores large collections and allows them to be re-downloaded on demand (effectively giving mobile device owners access to their entire music libraries beyond the limited capacity of their devices) has proven unexpectedly popular. Apple pays a fee every time a song is streamed from the service, which has proven to be a windfall for record companies and particularly independent and smaller labels. The streaming radio service, if it comes together, may be a extension of that idea.

Last year SoundExchange, the agency that collects royalties from web and satellite radio, reported its revenue had risen 58 percent. All together, the various subscription services generate about $1 billion in revenue for the music companies, but thus far none have managed to reach profitability. Both Pandora and Spotify have said point-blank they cannot continue indefinitely without a serious reduction in streaming music fees, however the record companies -- smarting from lower CD sales -- are intent on milking the new cash cow for all its worth.

As with the book, digital video and music industries, it may take a player with the clout of Apple to find the balance between a fair price for the music providers and a profitability for the web radio industry. Should Apple be able to get a better deal than Pandora presently has, it would present a powerful argument for other streaming providers to pressure labels for a lower rate in the name of preventing an Apple monopoly, a case the record companies might be willing to invest in.



By Electronista Staff
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  1. nowwhatareyoulookingat

    Fresh-Faced Recruit

    Joined: 07-13-09

    itunes match a goldmine

    for the labels is right. You pay them to stream music you already own to your own device.

    w.r.t. the labels, it truly is "money for nothing". And no, they don't give any of it to, you know, the artists they "represent".

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    I think it really is time to stop the label-bashing. It's bullshit, and mostly has been for the past decade and a half.

    These days, artists sign up with labels, usually non-exclusively, for certain tracks, because labels can get them visibility and distribution, and work out deals with services like iTunes streaming.

    For consumers, it's pretty much come down to "music for nothing". Consumers stream on demand from YouTube or Spotify, and no longer buy the media that artists used to depend upon to pay for their studio and their months of labor and decades of education and experience. This is not judgement; it's simply the way things are.

    This isn't about "money for nothing"; this is about trying to adapt payment models to completely changing consumption patterns, to enable artists to continue working.

  1. chas_m

    MacNN Staff

    Joined: 08-04-01

    I'm with Spheric

    While I am not a fan of the big record labels and how slowly they've (not really) adapted to digital music, this idea that they don't pay recording artists *at all* is patent nonsense -- since no artist would sign with a major record label if that was true.

    The $25 price of iTunes Match gives me something *I can't do for free, or indeed any cheaper* than that -- I have access to an enormous library of music that I know I like that is available to me anywhere I am. Spotify etc are great but that's not the same thing at all. And unlike Spotify (and of course pirating), *artists get paid* from the money I put into iTunes Match. To me this is a win-win.

  1. iphonerulez

    Fresh-Faced Recruit

    Joined: 11-28-08

    Apple better do something...

    to help shareholders get something out of owning the stock. Apple's declining share price is just stinking up the stock market where most companies are at their record highs. If iRadio is the best Apple can do for now with their growing cash pile then we'll just have to settle for it. Hopefully, it will expand to movies and TV shows when Apple starts completing their server farms. Amazon, Netflix and Microsoft are already putting money into producing their own media content. Apple needs to get on the ball and start doing the same thing. Apple should consider purchasing Hulu which might bring in quite a bit of side revenue if managed properly.

  1. taojones

    Fresh-Faced Recruit

    Joined: 07-15-09

    comment title

    there are already free radio apps out there . i think apple should make a new hardware device the Ij jukebox . they could pay performance royalties to the artists the device could have no permanent storage so there is no "buying" of the song strictly pay per play . imagine sitting in your pub and using your phone or i tunes account to play songs . that keeps beer money in you pocket for the night and you get th share the entire i tunes library with your friends . apple is at the top of the revenue stream artists get paid ,bar owners get paid apple gets paid we get unbelievable selection in our public spaces . to me thats the next big thing

  1. nowwhatareyoulookingat

    Fresh-Faced Recruit

    Joined: 07-13-09

    why?

    Why do you believe the labels [and to a very small extent, the artists] should be paid extra, every time you listen to a song, for you to listen to music you already paid them for, just because the file is streamed from Apple's server instead of your own?

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    I believe alternative business models need to be developed to deal with the changing usage. For the past hundred years, the artist collected royalties for every radio broadcast you listened to, even if you already owned the record or the sheet music.

    It's just a way of calculating usage of something that is hard to assign a material value to, but that NEEDS to have a material value in order for people to be able to create it.

    And again: cut out the label-bashing. It's bullshit.

  1. nowwhatareyoulookingat

    Fresh-Faced Recruit

    Joined: 07-13-09

    Re: Spheric Harlot

    Actually NO, artists HAVEN'T collected royalties for music broadcast over radio. That is what the labels are pushing for now, to be able to force radio to also pay them [nevermind the multiple payola scandals where labels paid music stations to play their songs to boost sales].

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Artists collect royalties for radio airplay here in Germany. Stations don't pay in the US?

    How does "unauthorized broadcast", as per the print on all media, turn into "authorized" broadcast?

    I'm pretty sure the payola stuff was decades ago, mostly.

  1. nowwhatareyoulookingat

    Fresh-Faced Recruit

    Joined: 07-13-09

    comment title

    No, radio stations in the US don't pay royalties for airplay. And the entire idea of payola was to get the radio stations to play the music, so people would buy it. And it worked.

    Merriam Webster Definition of BROADCAST
    1 : cast or scattered in all directions
    2 : made public by means of radio or television
    3 : of or relating to radio or television broadcasting

    You getting Apple to send music you purchased to you doesn't meet any of those definitions.

  1. Spheric Harlot

    Clinically Insane

    Joined: 11-07-99

    Originally Posted by nowwhatareyoulookingatView Post

    No, radio stations in the US don't pay royalties for airplay. And the entire idea of payola was to get the radio stations to play the music, so people would buy it. And it worked.


    On the payola: Right.

    On the royalties: Wrong.
    Royalties | BMI.com
    These are creators' royalties, though, and they have nothing to do with the labels at all.

  1. pairof9s

    Mac Enthusiast

    Joined: 01-03-08

    label-bashing has its justification

    I understand your point that label-bashing has become somewhat of a crutch in any discussion of lowering music costs. But this bashing has its origins in a well deserved criticism...why, for so long, did consumers need to continue to pay for music they didn't want (albums vs singles), music they couldn't mobilize (limited media consumption), and music they couldn't filter (commercial radio)?

    While MP3 may have created as a means to "steal" music, it along with more mobile, customized playing devices (iPod) finally allowed the consumer to truly control those 3 aforementioned aspects of their listening experience instead of labels...bash away!

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