Apple's Pandora-Killer Delayed Over Song Licensing Negotiations
Earlier this month, the WSJ reported that Apple was working on a streaming radio service to rival Pandora. Apple was reportedly in licensing negotiations with record labels, but was months away from launching the service.
Today, the New York Post reports that negotiations with music publisher Sony/ATV have hit a snag over the fee Apple would pay for each song streamed by its customers.
"Apple’s plan to have its own music-streaming service built into the iPhone 5 was dramatically dashed when talks between the tech giant and Sony/ATV hit a last-minute snag, The Post has learned."
"Sony/ATV, the world’s largest music publisher, and Apple couldn’t agree on a per-song rights fee, sources close to the situation said."
Those rights are usually tenths of a penny per stream, sources said. Sony/ATV was looking for a higher rate."
The Post reports that Apple wants better licensing rates than Pandora because it will direct record sales through the App Store, and Apple's restrictions on playing an artist multiple times would be looser than Pandora's.
09-28-2012 11:53 AM
Apple likely to launch streaming radio service in 2013, long before apple’s tv servic
Apple has been rumored to be prepping a streaming radio service for more than a year now, and according to a number of recent reports it looks like 2013 will finally see the company’s Pandora competitor become a reality. BTIG analyst Richard Greenfield on Friday issued a note clarifying that Apple’s streaming radio service — or “iRadio,” as he calls it — will launch in 2013. The analyst points to obvious indications in Apple’s iTunes 11 redesign in stating that the service’s launch is imminent. Greenfield also believes that Apple’s radio service will launch “well before” any television services that Apple may currently be working on.
“iRadio appears to be a product that will materialize far sooner than some form of Apple Television product, which continues to be a work in progress,” the analyst wrote.
Greenfield continued, “In August 2012, we revisited the Apple Television debate, where we highlighted three key issues holding the product back: Nationwide Coverage, Are Managed Services Legal and TV Everywhere Usage restrictions as a follow up to our April 2012 blog post, where we stated:
Apple’s pursuit of the television will take longer to come to fruition than investors are likely expecting.
While we believe MVPD/ISPs such as Comcast and Time Warner Cable stand to benefit immensely from opening up their API to enable a premium priced Apple generated user interface, we believe the product could take at least another year to materialize, if not longer due all of the aforementioned challenges.”
In the near future, however, BTIG sees the upcoming streaming music service as an integral part of Apple’s strategy moving forward. “We continue to believe an iRadio product is critical for Apple to create a local advertising/commerce strategy, tying together Maps, Passbook, Siri and a new music service (which we are calling iRadio for now),” Greenfield concluded.
Apple’s Pandora-Like Service Is Nowhere Near Being Completed [Rumor]
Apple released iTunes 11 last week and it’s a step in the right direction. Its interface is cleaner and easier-to-use than previous versions, but what Apple fans have really been wanting for the past couple years is an unlimited music streaming service akin to Rdio, Spotify or Pandora.
Rumors surfaced earlier this year that Apple is working on a Pandora-like radio service backed by iTunes’ huge music catalog. Some hoped Apple would introduce the service before the end of the year but a new report claims that the new streaming service is nowhere near to being complete.
CNET reported this morning that music industry sources have told them that the deal Apple has offered for iRadio has left the major record labels cold.
“At a minimum, a deal with all the majors is nowhere near to being completed. Even if Apple sweetens its offer or the big labels change their mind tomorrow, these deals take a while to put to bed. Even in the best case scenario, it will still be a while before we see iRadio.”
Eddie Cue is the Apple executive behind the negotiations, but has faced huge roadblocks in his negotiations with Sony/ATV and things aren’t going so well with the other labels either . Cue has become Apple’s main negotiator as he oversaw the growth of the iTunes Store, App Store, and iBookstore. He’s recently been tasked with fixing Siri and Maps along with running the iTunes division.
Music service's structure, plus Apple's culture, holding up 'iRadio' service
Industry sources are saying that Google's willingness to acquiesce to music label demands and the structure of the hybrid service Apple is trying to build are the main reasons why the search giant's music service is live now while the iPhone maker's offering might miss WWDC.
Google rolled out All Access for Google Play Music users this week during the keynote for its I/O developer conference, beating Apple by at least weeks to what some industry players hope will be the future of music: subscription-based services. Meanwhile, Apple's status as a hardware tech giant isn't helping it as much as it would have hoped with the music labels, sources tell The Verge.
One obstacle to Apple rolling out its long-anticipated "iRadio" service is the Cupertino company's longtime resistance to paying advances to the major copyright holders. That, along with an initial lowball royalty offer to the record labels, has kept Apple's service in a holding pattern, even as the company's Worldwide Developers Conference approaches.
Instead of an up front assurance payment, Apple is said to be offering a combination of royalties per track streamed, a share of iRadio's advertising revenue, and a guaranteed minimum payment if the previous two options prove insufficient. Universal Music may have already agreed to Apple's terms, but Sony Music is thought to be the main holdout.
Google, meanwhile, is said to have agreed to pay advances in order to get its service out the door. Google's choice to hew to the path worn by services like Spotify and Rdio — that of the plain subscription service with some radio and discovery elements — is also said to be more to the music labels' liking. The labels, burnt early in the last decade by rampant file sharing, are looking to secure a steady revenue stream in exchange for their product, assuring that songwriters, engineers, publishers, and other shareholders continue to be paid.
Apple's offering, on the other hand, is reportedly more of a hybrid service, blending elements of Internet radio with other on-demand features. The licensing agreements for such a service, sources say, must be built from the ground up, and those negotiations are part of what's holding the service up.
In addition to Google's All Access, Apple's offering would join Spotify, Rdio, Microsoft's Xbox Music, and others in the new generation of music discovery and consumption sources. The record labels are encouraged by the number of options consumers have to access their product of late. iTunes may have contributed greatly to the industry's first revenue growth in years, but the labels have historically been wary of Apple's overwhelming influence on their industry.
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