Report: Apple Negotiating With Labels For Streaming Service
March 7, 2013

Apple has reportedly begun negotiations with the major labels for licensing rights for its potential music streaming service. However, according to The New York Post, Apple has received early resistance on the label side, as its initial offer is seen as too low.

Sources tell the Post that Apple is offering roughly six cents-per-100 streamed songs, which is almost half of what Pandora pays out in its rate of 12 cents-per-100 songs. One anonymous executive told the paper that "Apple wants a rate that is lower than Pandora's."

The Post notes that while the labels are eager for a new revenue stream via Apple, they don't want to accept a lower offer as Pandora leads a fight in Washington to lower its own royalty rates. The paper's sources suggest Apple should pay at least 21 cents-per-100 songs, a rate set by the Copyright Royalty Board for companies that don't own broadcasters. Services such as Clear Channel's iHeartRadio pay out roughly 22 cents-per-100 streamed songs. The Post says that Spotify pays the highest rate, at 35 cents-per-100 songs.

As reported yesterday, Google is moving closer to launching two new digital music services, and Warner Music Group has reportedly already signed a licensing deal for them. Meanwhile, it was also reported yesterday that Apple CEO Tim Cook recently met with Jimmy Iovine to discuss his upcoming streaming service from Beats.

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Manny Simon
VP/Adult Formats,
Republic Records

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