Major Labels Reportedly Unhappy With Terms Of Proposed Apple Radio Offering

Not Popular At The Labels

All is not going according to plan for APPLE's proposed Internet radio offering. CNET reports, "APPLE is working hard to convince the major record companies to buy into its plan for a Web radio service, but some at the labels don't like what they're hearing."

Last month (NET NEWS 10/26), ALL ACCESS reported APPLE had intensified their talks with major music labels to start an advertising supported streaming-radio competitor to PANDORA MEDIA INC. by early next year. The service might have launched this year if not for a snag in talks between APPLE and SONY/ATV over a per-song rights fee.

Now, CNET writes, "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," and adds "In exchange for this greater flexibility with songs, APPLE is offering a percentage of the ad sales generated by the service. CNET's sources say that some of the sector's leaders don't believe the cut APPLE put on the table is big enough. Others in the music industry, however, argue it's good for the overall business if APPLE takes on PANDORA."

Then there's the ongoing fight over the proposed "Internet Radio Fairness Act," which a House committee is considering. "Some music industry insiders speculate that APPLE could conceivably throw in with PANDORA and help get the Internet Fairness Radio Act passed," notes CNET. The legislation is strongly opposed by the major labels. "CNET has learned that the top record companies plan to quietly gather next week to discuss their strategy for fighting the legislation. In addition to the representatives from the top three labels, invitations were sent this week to some of the music industry's top music managers."

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