Apple's 'iRadio' talks hit stumbling block

Negotiations between Apple and record labels over much-anticipated music streaming service hit a snag.

by Elizabeth Anderson
Last Updated: 14 May 2013
For months, Apple has been plotting to launch its own internet radio service, dubbed 'iRadio'.

The streaming music service is expected to launch this year, but in order to do so the California-based tech giant needs to reach an agreement with major record labels over the rights to their songs.

The prospect of promoting new hits through iRadio has left piracy-crippled music companies excited, but at the same time they are holding out for the best deal possible as they try to secure a lucrative slice of what some predict will be the future of radio.

Universal Music has reportedly already agreed to make its catalog available on Apple’s iRadio, pipped to be similar to the ones offered by Pandora and Spotify. Apple is also thought to be close to reaching an agreement with Warner Music.

But Apple has hit a stumbling block with Sony Music, according to the Financial Times. Apple's most recent offer to Sony was 12.5 cents per 100 streamed tracks, but the label is thought to be pushing for more. According to the FT, the company wants Apple to pay more than the standard rate paid by Pandora, which had 70m 'active listeners' in April, because of its 'broader ambitions for iRadio.' This includes a plan to allow listeners to purchase songs seamlessly via the iTunes store.

Apple originally hoped to introduce iRadio at the same time as the iPhone 5 last year, although that has now been pushed back to the summer. But Apple needs to be quick as competition looms from Google, which is preparing to launch its own music streaming service to complement its highly popular video streaming site YouTube.

Both Apple and Google have had success with music downloads, but they are trying to catch up with the shift towards streaming music, made popular by the likes of Pandora and Spotify.

The advantage to streaming is that a user can access songs anywhere (providing they have an internet connection), rather than music being restricted to a user's hard drive. It could also open other potential revenue sources for squeezed music labels, who have suffered at the hands of digital piracy. Is this just what the music industry needs?

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today