Apple's iRadio to reportedly pay Warner Music a royalty rate the same, or higher, than Pandora

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Issue Date: 
Jun 3 2013 - 11:40am

From Issue:

Apple has reportedly taken a step closer to launching its online radio service, by securing licenses from both label group Warner Music and music publisher Warner Chappell. Some observers are still looking for a launch at WWDC (Worldwide Developers Conference), which begins June 10. Earlier reports had indicated that Apple already had a deal with WMG (see RAIN here).

CNet's Paul Sloan writes today, "The deals reached so far offer far better economics for the music labels and publishers than what they get from Pandora, the product that most closely resembles iRadio."

CNet's sources say Apple -- which had been rumored to be getting a discount -- will pay labels and performers the same per-stream rate as Pandora (currently either $.00120 per song per listener or 25% of gross revenue, whichever is higher; more here). Interestingly, Billboard writes, "The agreement with Warner calls for Apple to compensate the company at higher rates than what is currently paid by most Internet radio services such as Pandora... around 0.16 cents ($.00160), similar to the rate Universal Music Group received."

The new service will net publishers "more than twice the ad share revenue they currently receive from Pandora," says CNet. The New York Times writes, "Publishers... paid about 4% of Pandora’s revenue... want as much as 10% from Apple."

Apple apparently will also share ad revenue with labels, and promises a more seemless way to purchase music via iTunes.

Notably, Apple will supposedly be allowed to enable listeners to "rewind" songs (prohibited by the DMCA's statutory license and all current SoundExchange licenses with various classes of webcasters -- see RAIN's royalty round-up here).

Among major labels and publishers, Apple still needs to secure deals with Universal's music publishing arm (the company already has an agreement with Universal Music Group) and both Sony Music and Sony/ATV (publishing) (more in RAIN here).

Read more in CNet here, The New York Times here,  and in Billboard here.

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