Apple's Net radio service reportedly delayed by music rights negotiations

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Issue Date: 
Mar 8 2013 - 6:10pm

From Issue:

Recent reports indicate that Apple's plans for launching a customizable Internet radio service have been slowed by difficult negotiations with rights holders -- both labels and publishers. 

At one time Apple had reportedly hoped to make its Internet radio service part of the iPhone 5 launch. When dragging talks with labels and publishers made that impossible, the company planned to launch around Grammy Awards last month. Now The New York Times says Apple won't likely come to market until summer or later.

The company wants to preload an app on iPhones and iPads to deliver customized music streams, free-to-use and supported by its iAds platform.

The New York Post reports that Apple reportedly offered to pay record labels "about 6 cents per 100 songs" -- roughly just half what Pandora pays. ("Songs" here means "performances," that is, a single song streamed to a single listener.) Record labels, which are in most cases the owners of copyright sound recordings, want Apple to pay "at least" the statutory streaming rate of about 21 cents per 100 performances. (Broadcasters pay slightly more than the "pureplay" statutory rate to stream sound recordings.) Some analysts say Apple is learning that it no longer has the negotiating weight it once did when Steve Jobs and the company first launched the iTunes download store.

Apple also needs to negotiate with publishing/composition rights holders. In this area, talks are reportedly snagged by Sony/ATV, which recently withdrew digital rights from ASCAP and BMI (which led to a big increase in what Pandora pays). See more in RAIN here and here.

Read coverage from The New York Times here and the New York Post here.

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