Apple reportedly has all finalized deals with all major labels and publishers in time for WWDC

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Issue Date: 
Jun 10 2013 - 12:15pm

From Issue:

[From Monday's early edition:]

Today's the day -- Apple is widely expected to unveil its long-awaited Internet radio product to developers today at its Worldwide Developers Conference. The service is expected to launch for consumers in September, according to The Wall Street Journal.

Launch of the new service was delayed by negotiations with music labels and publishers, and the final deals weren't finalized until late last week (see RAIN here) (the final publishing holdout, Sony/ATV, has apparently reached an agreement with Apple -- see CNet's reporting here).

The Journal reports that two of the tougher matters to settle were "the point at which Apple must begin sharing ad revenue with the labels and the minimum guarantee it would offer as an insurance policy." There was also disagreement over "whether Apple will have to pay for songs listeners skip — it won't under some deals — and how well it should compensate music publishers."

All Things Digital's Peter Kafka writes today that "If Apple wants to generate real ad money for iRadio, then that means it has to try to crack the market for radio ads. And that is a very, very un-Appley business.... It doesn’t really matter what kind of precision targeting the Internet offers — the bulk of that $14 billion comes from local ad sales," he wrote. "And it’s a slog." Read more from Kafka here.

According to the paper's sources, Apple will pay the labels about half of the ad revenues, with publishers getting only 10% (which is actually more most webcasters and broadcasters pay).

Read more from The Wall Street Journal here.

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Apple and Radio

Remarkably, Peter Kafka simply fails to understand Apple's business model. Apple does not have its sights on the ever diminishing $14 billion dollar radio ad market, it's in the hardware business.

Apple aggregates content that makes its hardware products irresistible lifestyle accessories. The iPods success was driven by iTunes. IRadio, if it's called that, is simply the acquisition of more content intended to be utilized to help sell Apple hardware products.

Yes, Apple will sell ads, but this strategy, in my opinion, is designed to make the record companies believe that they are getting in on a new revenue stream, thus making the deal with Apple more attractive... So, Apple gets the content it wants while having radio advertisers help pay for it. But the big money, really big money, is still in highly profitable hardware sales and having everyone's credit card number. Apple's nearly 100 billion dollar cash holdings didn't come from selling songs, or ads.

Anyway you look at this, one thing is for certain... The days of AM/FM as a highly profitable business model are numbered. The future is purely digital and on the Internet.

'iRadio' has two past incarnations, neither by Apple.

Reports are, and I read this on the ksl.com website, that Apple's new service will be called 'iRadio'.

Two big problems, prior art.

Motorola still could hold the trademark and even a patent, as they ran the 'iRadio' platform in the mid 2000s, in an incarnation that used cellphone memory or other storage methods to play radio offline. There are some posts in this very blog about that. (those were on the old textpattern.kurthanson.com version).

Also, iradio.com has been a registered domain since 1995. It's still registered although just retrieving it found it parked and for sale.

Then add to that last weeks report of antitrust reported here. What a snakepit.

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