Rumor Mill: Sony balks at Apple iRadio song skipping, delaying launch

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Sony Music Entertainment is refusing to sign off on song skipping features integrated into Apple's (NASDAQ:AAPL) iRadio, delaying the long-rumored streaming music service's commercial launch, CNet reports.

Sources familiar with the negotiations said that Sony and Apple remain deadlocked over how much iRadio will pay record label partners for songs that listeners sample for a few seconds, then skip over. Insiders indicate there could be other points of contention as well.

Sony declined to comment. Apple did not respond to a request for comment.

Earlier this month, The Financial Times reported Apple has completed a deal to offer Universal Music Group's digital catalog via iRadio, and an agreement with Warner Music is said to be imminent. 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. While it is unclear whether Universal has accepted the 12.5-cent rate, the other labels are believed to be demanding even more favorable terms.

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. But CNet notes 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.

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--Reuters later 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.

The pressure is on Apple to bring iRadio to market. Last week, archrival Google unveiled Google Play Music All Access, a streaming music service offering personalized recommendations, featured content and music tailored to users' collections and previous listening behavior. The service allows users to listen to specific songs and albums and to create radio stations based on any song or artist:  "This is radio without rules," Google Engineering Director Chris Yerga boasted.

Google Play Music All Access is available now with a 30-day free trial for users in the United States. After that free trial period, the service will cost $9.99 per month (though users who sign up for the service this month will pay only $7.99 per month).

For more:
- read this CNet article

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