Record Labels Are Keeping Apple’s Rumored Internet Radio Service At Bay [Report]

Record Labels Are Keeping Apple’s Rumored Internet Radio Service At Bay [Report]

By now you’ve probably heard that Apple is gearing up to launch an internet radio-type service next year that will compete with the likes of Pandora and Spotify. Apple has been working behind closed doors for quite some time to make the upcoming service a reality, but talks with the big record labels have continued to slow Apple’s plans.

Yesterday we told you that Apple was aiming to close deals with the labels by next month, and now a report claims that music executives are still not convinced that they should buy into what Apple is selling.

CNET follows up on yesterday’s Bloomberg report about Apple’s rumored ‘iRadio’ service:

Bloomberg reported this afternoon that Apple’s negotiations with the three top labels have “intensified” over an ad-support Web radio service that Apple hopes to launch early next year. But music industry executives who spoke with CNET said that some decision makers at the big record companies want Apple to sweeten the offer.

The negotiations are ongoing so the terms could change, but the sources said Apple has offered to pay a lower royalty rate than Pandora pays even though it wants to provide iTunes users with the ability to do more with the music than Pandora’s customers enjoy.

Pandora is by far the biggest internet radio service, and Apple wants to make its product more compelling to entice users away. Many influencers in the music business are afraid of Apple because it owns over half of the music market with iTunes, but many also believe Pandora needs a strong competitor. The main hang-up with negotiations between Apple and the labels is sharing ad revenue. Apple is reportedly proposing to give the labels a cut of iAd revenue in exchange for unlimited skips and exclusive access to new releases before anyone else.

Last month a report said that Sony had stalled Apple’s negotiations over licensing fee disputes. Hopefully deals will be reached sooner rather than later.

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  • Shaun Green

    I can’t see how it benefits the record labels to allow Apple to gain an even bigger control over the market. The record labels have been complaining for some time about little money they get paid in royalties from the likes of Pandora and Spotify.

  • extra_medium

    I can’t see how it benefits the record labels to allow Apple to gain an even bigger control over the market. The record labels have been complaining for some time about little money they get paid in royalties from the likes of Pandora and Spotify.

    Record labels do nothing but complain no matter what. If the business model doesn’t consist of selling some sort of outdated physical media in retail stores, they aren’t happy. But yet they still manage to put out the same rehashed music year after year and their execs still manage to summer in the Hamptons year after year.

    The ad revenue they’ll get from this apple deal is infinitely more than they are getting from it now, which is zero. If its truly such an emergency in the music business and Bentleys are being auctioned off in order to keep the doors open, they should take advantage of every form of revenue they can get. Save the private jets!!

    And they’re worried about unlimited skips? They are just making things up to be concerned about now.

  • whitts_dad

    I hope its more like Spotify than Pandora.

About the author

Alex HeathAlex Heath has been a staff writer at Cult of Mac for three years. He is also a co-host of the CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Twitter always works too.

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