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.