Report: Apple inks iRadio deal with Warner, WWDC launch possible
Apple (NASDAQ:AAPL) has completed streaming music licensing agreements with Warner Music Group and its Warner/Chappell publishing unit, The New York Times reports, suggesting the computing giant could formally unveil its so-called "iRadio" service at its annual Worldwide Developers Conference, kicking off June 10.
Sources said Apple and Warner signed off on the deals Sunday, noting Warner is the first of the three major labels to agree to terms on both recorded music and publishing rights. Last month, The Financial Times reported Apple completed an agreement to offer Universal Music Group's digital catalog via iRadio; insiders say Sony Music Entertainment and its Sony/ATV publishing arm refused to sign off on song skipping features integrated into the service, however, taking issue with how much Apple will pay record label partners for songs that listeners sample for a few seconds, then skip over. There may be other points of contention as well.
Sources said Apple is redoubling its efforts to wrap up all licensing deals over the next week in order to announce iRadio during WWDC, its marquee annual showcase. Representatives for Apple and its music partners declined to comment.
Apple reportedly is offering labels three tranches of iRadio revenue: Royalties per track streamed, a share of advertising proceeds and a guaranteed minimum sum over the course of the contract in the event the number of plays or advertising sales disappoint. Insiders said Apple initially proposed a royalty of about 6 cents for every 100 tracks it streams, later raising its bid to about 12.5 cents, in line with the rates paid by Internet radio service provider Pandora. It is unclear whether Warner and Universal accepted the 12.5-cent rate or negotiated even more favorable terms.
CNet contends that Apple has stymied its own progress by choosing to negotiate direct deals with labels instead of embracing the Pandora model, which follows licensing terms established by federal statute--a setup that limits music industry revenues and also hampers Pandora's ability to expand internationally. Pandora's own song-skipping guidelines follow the 1996 Digital Millennium Copyright Act, which allows subscribers to bypass six songs per hour per station, for up to 12 total skips each day across all stations on the Pandora platform. Every time listeners skip a track, give it a thumbs-down rating or select "I'm tired of this track" in the menu, Pandora must pay full royalties for the song, regardless of how long it plays.
The Wall Street Journal and The New York Times first reported on Apple's plans to enter the streaming radio segment last fall, but iRadio has remained in limbo. The pressure to bring the service to market intensified last month when archrival Google (NASDAQ:GOOG) launched Google Play Music All Access, a streaming music service offering personalized recommendations, featured content and music tailored to users' collections and previous listening behavior. Last week, Google said it would extend the service to Apple's iOS mobile operating system in the near future.
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