Apple has been trying hard to push its music streaming service since quite some time now. Strong rumours were suggesting a release of music streaming service rivalling Pandora and Spotify alongside iPhone 5 launch itself but Apple seems to have facing resistance from Record Labels. New York Times suggest that Apple is trying to strike a deal at 6 cents per 100 songs streamed which seems to be way lesser than industry set standards of 21 cents per 100 songs. Record Labels feel that Apple, with its $137 billion cash reserve needs to shell out more rather than being so greedy.
Source: New York Times
Current leaders in industry are offering much more than Apple is to the Record Labels, with Spotify is making a payment 12 cents per 100 songs, Pandora a whooping 35 cents per 100 songs, iHeart around 22 cents per 100 songs. The least payment is being done by Spotify which is still double that of what Apple is offering.
One major advantage for Record Labels if they sign up with Apple is that the amount of traffic Apple can drive to them. Currently Apple is the industry leader for Songs service with its iTunes platform, Apple can potentially convert all those millions of users towards its music streaming service and offer higher revenues to the Record Labels. Apart from that current services like Spotify are not even able to make any profit and are in a negotiation with Record labels to reduce the royalty fee further.
Providing the music streaming service is quite essential to Apple to morph itself with the ongoing in demand service, also it is a huge advantage for Apple to push its iAd service along with the music streaming service.