Last week we reported about the progress of Apple music streaming service, iRadio, being delayed because of pricing issues between record labels and Apple. It was reported that Apple was willing to pay a mere 6 cents per 100 songs to the record labels as compared to the industry standards of 21 cents per 100 songs. Even reputed services like Pandora and Spotify pay as high as 31 cents per 100 songs currently which is way higher than what Apple has been offering to the record labels to sign a contractual agreement. Apple’s main reasoning was its advantage over rivals of having millions of users already using iTunes and iOS platforms who will also migrate to its music streaming service when launched. But a report that emerged on Tuesday claims that Apple has almost done a deal with two major record labels that would accelerate its launch plan for iRadio service.
Apple seems to have cut a deal for a price almost half of what Pandora is offering to the record labels but Apple is also offering other sources of revenue that is making the deal more lucrative to the record label companies. The report that emerged from CNET claims that apart from the standard steaming fees that Apple pays to the record labels they will also make more money from song downloads which is part of Apple’s music streaming service. Apple seems to be linking the streamed songs to the songs in iTunes where users can purchase the songs they like if they want them to be available all the time on their devices. This will enable record labels to propel their sales of normal song purchases on iTunes thus generating more revenue.
Apple also seems to be offering a share to record labels in the music ads that Apple is planning to include in the streaming service, which still is not very conclusive because of various issues related to implementation of excessive features at launch.
The report even says that record labels are still skeptical about the other sources of revenue, but one safe bet is Apple’s current offerings for per 100 songs is still lucrative for them considering the volumes iTunes can generate compared to Pandora or Spotify.