Report: Apple close to sealing iRadio streaming music deals
Apple (NASDAQ:AAPL) is close to signing streaming music licensing agreements with two major record labels, CNet reports.
Citing sources familiar with the negotiations, the report states Apple could complete agreements with Warner Music and Universal Music within the next week. While the so-called "iRadio" service would offer label partners roughly half the per-stream rate they generate from dedicated digital music platforms like Pandora, Apple is promising new revenue channels to make up the difference, including integration with its iTunes digital media storefront as well as a cut of new audio advertisements Apple plans to roll out in association with the service.
Apple, Warner and Universal are still hammering out ad revenue sharing, with the labels pressing for as much as 35 percent to 45 percent in exchange for consenting to a smaller share of per-stream profits. "The only thing concrete in the contract is the per-play rate," said a source familiar with the terms. "If you end up having no ad revenue, that's still zero. And we won't know what the buying habits will be. Will people streaming still take the time to buy from iTunes?"
Sources say iRadio will closely evoke Pandora in terms of functionality, eschewing on-demand listening in favor of programming content based on users' favorite artists, songs and genres. Apple also will add unique features like the ability to jump back to the beginning of a track. Like Pandora, Apple will offer the service via multiple mobile operating systems as well as the desktop.
Insiders caution that neither label deal has been finalized and could still fall apart. Apple must also sign iRadio agreements with Sony Music and music publishing organizations to offer consumers a catalog experience on par with rival services. Even so, Apple is telling partners it plans to launch iRadio this summer, rolling out the platform in the U.S. as well as key international markets like the U.K., France, Germany, Australia and Japan.
An Apple spokesperson declined to comment.
Rumors of Apple's impending entrance into the streaming music segment have swirled for months. The Wall Street Journal and The New York Times first reported on an Apple streaming radio service last fall--last month, Reuters reported that Apple CEO Tim Cook and Senior Vice President of Internet Software and Services Eddy Cue had met with Beats Electronics CEO and co-founder Jimmy Iovine to explore a potential partnership involving the audio technology firm's forthcoming Daisy streaming service. Rivals Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) are reportedly exploring streaming music efforts as well.
Subscription-based and free Internet radio services like Pandora and Spotify accounted for 23 percent of average weekly music listening time among U.S. consumers between the ages of 13 and 35 during the fourth quarter of 2012, up from 17 percent in the year-ago period, thanks to increasing mobile engagement, according to a NPD Group report issued earlier this week.
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