Rumors of Apple launching a music streaming service similar to Pandora have been floating about for quite a while now, but if the recent rumors are to be believed, the service could be seeing a delay in launch due to negotiations with the major labels stalling. What’s the reason behind this stalling, you ask? Well it seems that Apple does not want to pay the major labels the same royalty rates that Pandora is paying. A report by the New York Post has suggested that Apple has offered labels an initial royalty rate of 6 cents per 100 songs streamed.
This royalty rate is apparently half of what Pandora is paying now, which is 12 cents per 100 songs. Comparing this to other radio services such as iHeart who pays about 22 cents per 100 songs, and Spotify who pays the most at 35 cents per 100 songs, Apple is certainly low-balling the major labels. This delay due to negotiation of royalty rates have since been corroborated by both the New York Times and Bloomberg.
If we had to speculate, we guess Apple is hoping to leverage the success they’ve had with iTunes and the iTunes ecosystem to avoid paying the higher royalty rates that other services are paying. However major labels being what they are, businesses, probably don’t see it that way. It should also be taken into consideration that lower royalty rates could also mean that the artists involved will be paid less as well.
Either way it looks like we could be in for a wait, but in the meantime what do you guys think? Since there are streaming services such as Rdio, Pandora and Spotify, do we really need another outlet?
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