Apple’s low royalty rate offer for streaming music has record labels grumbling

Mar 7, 2013
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Apple’s low royalty rate offer for streaming music has record labels grumbling

It's no secret that Apple has been looking into launching its own music streaming service. Yesterday, we reported that Apple's Tim Cook and Eddy Cue had met up with Beats' CEO Jimmy Iovine to discuss Project Daisy, a music service the latter company has planned, including its business model and planned rollout. Now the tech giant has approached record labels with a royalty rate offer that has left them less than enthused.

Apple's streaming service would be up against some big name competitors such as Pandora, which pays $0.12 per 100 songs it streams. Record labels aren't happy with Apple's initial royalty offer because it is about half that rate at approximately $0.06 per 100 songs streamed. This is an extremely low offer, and it has labels grumbling.

Pandora itself pays a royalty rate that is nearly 10 cents less than the suggested 21 cents per 100 streamed songs set by the Copyright Royalty Board. Labels are saying that Apple should pay no less than this rate. Many other services pay even more, with iHeart Radio shelling out approximately $0.22 per 100 streamed songs, and Spotify paying $0.35 per 100 songs.

This information comes from the New York Post, which got its information from unnamed sources, one of whom is said to be a "high-level executive." According to these sources, in addition to a higher rate for streaming songs, labels also want Apple to pay an upfront fee, and to pay out a percentage of the revenue it makes from the ads that will be used with the streaming service.

[via New York Post]


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