Report: Apple's iRadio Runs Into A 6-Cent Brick Wall
March 7, 2013 at 4:05 AM (PT)
While APPLE's iTUNES is the darling of the music biz for its sales volume, its proposed music-streaming service is running into issues with record labels over fees offered for the music by APPLE. THE NEW YORK POST reports "the tech titan, the most valuable company in the world, made an initial offer to labels of about 6 cents per 100 songs streamed, sources said. That's about half of the 12 cents per 100 songs paid by PANDORA."
YESTERDAY (NET NEWS 3/6), news that GOOGLE would roll out a streaming music service had industry insiders excited about higher rates for record companies. Just last month (NET NEWS 2/26), ALL ACCESS reported great news for the music business, as sales broke a 12-year losing streak in 2012, posting a 0.3% rise in revenues to $16.5 billion, based on figures from the INTERNATIONAL FEDERATION OF THE PHONOGRAPHIC INDUSTRY. It was digital sales that showed the most growth, and compensated for losses in physical revenues for the first time. Streaming music services led the way, with subscription services such as SPOTIFY and DEEZER "coming of age" last year, according to the IFPI. It's expected they will cross the 10% mark as a share of total digital music revenues for the first time.
"Music label insiders suggest APPLE -- which is sitting on a cash hoard of roughly $137 billion -- ought to pay at least the rate set by the COPYRIGHT ROYALTY BOARD, or about 21 cents per 100 songs streamed," notes THE POST.
APPLE has several reasons for wanting to webcast. Its iTUNES service receives 50% of its referral business from mobile apps such as PANDORA, so APPLE is eager to control that business. In addition, "APPLE views radio as a way to make better use of its iADS advertising platform," writes THE POST. "An APPLE iRADIO product would be ad-supported."