Apple will pay music labels more than Pandora for its new iTunes Radio service, according to terms reviewed by The Wall Street Journal. In addition to a set fee, the Cupertino company will also cough up a cut of its net advertising revenue every time a song is played.
“Apple intends to pay royalties to labels based on a blend of how many times listeners hear their songs and how much advertising Apple sells, according to the terms,” the WSJ reports. There will be a set fee of $0.13 every time a song is played, plus 15% of net advertising revenue, proportionate to the label’s share of the music played on iTunes.
What’s more, Apple will increase the set fee to $0.14 in 2014, while the ad revenue share will increase to 19%.
In comparison, Pandora pays just $0.12 for every track played on its free service, and only half the royalties Apple pays.
Not every song you listen to will incur a fee, however. Those you’ve already purchased on iTunes or added to your library from a CD or other means won’t cost Apple a penny — no matter how many times you listen to them. Tracks selected by iTunes for special promotions will also be exempt.
Apple also won’t pay a fee until at least 20 seconds of a track is played. So if you skip the song before that point, then the label receives nothing for it.
Apple’s deal with independent labels is similar to those in place with the three major labels, but not exactly the same, the WSJ reports. Some are expected to receive cash advances against future royalties instead.
Pandora founder Tim Westergren believes it isn’t fair to compare the royalties rates Apple has agreed to with Pandora’s, because the two services work differently. “It’s apples and oranges,” he told the WSJ.
Source: The Wall Street Journal