Price negotiations stall Apple music-streaming service roll out

8 Mar 2013

The iRadio streaming music service planned by Apple that will compete with Pandora and Spotify is being held up by difficult negotiations. Record labels are believed to have rebuffed an offer of six cents per 100 songs streamed and want a fee of 21 cents per 100 songs.

Streaming is the order of the day in the music industry with services like Pandora, Spotify and Deezer providing consumers with a way of listening to unlimited numbers of songs for a reasonable subscription price.

It is an area Apple is keen to expand into, especially since failure to do so could threaten its success with iTunes.

Apple’s streaming service, unofficially dubbed iRadio by the tech press, is expected to manifest as an app that works across its iOS and Mac platforms.

The idea is that the service will be free but underpinned by the tech giant’s iAds advertising platform.

According to the New York Times, the app was tipped to debut in February around the Grammy Awards but it has been delayed by slow negotiations with record labels, particularly Sony/ATV, which controls the EMI catalogue.

The New York Post reports that the deal is stalling on how much Apple is willing to pay the labels for access to their catalogues on a streaming basis.

Apple is understood to have offered six cents per 100 songs streamed, which is half of the 12 cents per 100 songs that Pandora pays labels.

It is believed the labels are pushing to be paid about 21 cents per 100 songs streamed, which is in line with the amount terrestrial radio stations like iHeart pay (22 cents per 100 songs).

By comparison, Spotify pays about 35 cents per 100 songs.

Either way, the rollout of music streaming services are a logical next step for Apple to take.

Having pretty much created the commercial model for online music downloads, the market has shifted spectacularly in the direction of unlimited streaming supported by ads and subscriptions, and Apple needs to remain in the game.

Especially if it wants to bolster its iPod, iPhone and iPad hardware families with compelling content.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years