'iRadio' Rumors Grow, But Specifics Still Lacking
April 3, 2013 at 4:00 AM (PT)
In what may become a Hall Of Fame classic example of "burying the lead," a fleeting mention in a story about record labels "fighting PANDORA" over its royalty rate became headline news on the Internet. In the ninth paragraph of THEVERGE.COM's story about the labels demanding a royalty rate to keep them afloat without demanding too much that would put PANDORA and all of its brethren out of business, came this report:
Multiple music industry insiders have told THE VERGE that significant progress has been made in the talks with two of the top labels: UNIVERSAL and WARNER. (APPLE is already tied up with UMG for its iCLOUD service.) One of the sources said "iRADIO is coming. There's no doubt about it anymore." APPLE is pushing hard for a summertime launch.
Within 72 hours of that posting, over two dozen other websites ran with the "iRADIO coming this summer angle."
The problem is, not one of the stories offered any specifics at how close the parties were to a deal. While APPLE has long been rumored to be prepping such a music streaming service, the sticking point reportedly has been the royalty rate. THE NEW YORK POST reported last month that APPLE wants to pay 6 cents per 100-song streams, compared to SPOTIFY currently paying 35 cents per 100-song stream and PANDORA's statutory rate 12 cents per 100 spins.
The conundrum is obvious: If the labels agree to something close to APPLE's royalty demand, every other streaming service will demand an equal rate; PANDORA has been publicly demanding a cut in its royalty rate for a while now. It's hard to reconcile the fact that the labels want to generate more money from streaming when they're having everyone pay a lower royalty.
On the other hand, if they do offer APPLE a better deal, they risk having that tech giant dominate the streaming business, giving it more clout to set future terms than it already has -- not to mention putting the viability of its streaming rivals in question.
Suffice it to say, everyone is staying tuned....