3/6/13: Apple, Beats Electronics chiefs meet to discuss music streaming collaboration

Paul Maloney
March 6, 2013 - 12:30pm

Apple is reportedly in talks with Beats Electronics on a possible music streaming service partnership.

Sources say Apple CEO Tim Cook and Internet products chief Eddy Cue met with Beats CEO Jimmy Iovine to learn more about the Beats' upcoming "Daisy" streaming music service.

Relatedly, Beats announced yesterday $60 million in new funding for the project from an investment group that includes Warner Music owner Len Blavatnik, to bankroll the service's planned late-2013 launch.

It was early last September when word first leaked that Apple was planning to launch its own customizable streaming music service (RAIN coverage here) -- but on that was more of an Internet radio/Pandora competitor.

Beats is the Dr. Dre/Iovine company that makes the popular Beats headphones, and owns music subscription service MOG (which is being rebuilt as "Daisy"). At CES in January, Iovine told AllThingsDigital's Peter Kafka he'd long been trying to push the late Apple founder Steve Jobs towards creating a streaming music subscription service (see RAIN coverage here). Also at CES, Iovine and his company named former Yahoo! Music and Topspin CEO Ian Rogers (RAIN coverage here) CEO of Daisy. More on Daisy in RAIN here.

Read more about Apple and Beats from Hypebot.com here and Reuters here.

Paul Maloney
March 6, 2013 - 1:10pm

Lawmakers have made it pretty clear they don't want to hear about webcasting royalties any more -- including the Internet Radio Fairness Act -- before they deal with sound recording royalties for broadcast radio.

Inside Radio reports some radio executives are using the occasion of a conference in D.C. to visit with members of Congress and ask support for the "Local Radio Freedom Act." The non-binding resolution opposes any measure requiring U.S. broadcasters to pay sound recording performance rights (more from RAIN here).

Meanwhile, the record industry group musicFIRST Coalition answered with an ad in Politico (that's the image, full-size here), accusing broadcast radio of being "stuck in the past" (since other forms of radio like satellite, cable, and webcasters pay).

While the record industry publicly cites Internet radio as a paying customer for its copyright licenses, its representatives remain adamantly against measures that would likely bring webcast royalty rates in line with those paid by satellite and cable radio. The IRFA (more here) would require judges to use the same legal standard to determine statutory rates for streaming radio that they use for satellite and cable.

While satellite and cable radio royalty rates are determined using a legal standard known as 801(b), the 1998 Digital Millennium Copyright Act requires Internet radio rates be set using a different standard known as "willing buyer and willing seller." Unlike 801(b), "willing buyer and willing seller" ignores the "real world" ramifications of a rate determination, and all notions of fairness and minimizing industry disruption -- considerations of the 801(b) standard.

So while satellite radio pays about 9% of its revenue to license copyright sound recordings, leading webcaster Pandora pays well over half.

A late-November House Judiciary subcommittee hearing on the IRFA quickly lost focus on the bill as record industry witnesses (and the committee members sympathetic to them) steered the discussion to the AM/FM exemption (our coverage here).

Writing in Huffington Post, musician David Fagin blames the AM/FM exemption for lack of progress on webcasting issues: "Congress is scared to go after big radio and their lobby, and the RIAA is 'just fine' with the status quo. In the meantime, both sides have decided to just kick each other's asses, instead." (More in RAIN here).

Paul Maloney
March 6, 2013 - 2:05pm

Late yesterday Fortune reported that YouTube will launch a subscription music service later this year. This service, apparently, will be in addition to the rumored Google subscription service (Google owns YouTube).

"The two new services are defined by their respective places in the Google empire: Google Play for Android is a digital locker for music -- users buy, store, and sort a collection of tracks; but on YouTube's coming service, anyone can listen to tracks for free," Fortune wrote. "Both services are said to be adding a subscription fee that will unlock additional features. For the YouTube-based service, this will likely mean ad-free access."

Read Fortune here.