June 10, 2013 at 10:24 am

Apple’s iRadio Could ‘Pay Different’ to Major, Indie Labels

apple_wwdc_iradio_2013Apple is expected to announce its new iRadio music streaming service at the Worldwide Developer’s Conference later today, according to multiple sources, and has already inked special deals with all three major labels as well as Sony/ATV, which is Sony’s publishing arm. Sony/ATV CEO Marty Bandier says Sony/ATV will get 10 percent of the ad revenue generated by his music.

Update: Here’s the latest.

These bespoke deals between Apple and major labels and publishers will allow Apple to play their music on its “iRadio” service (assuming that’s really the name) without having to pay the government-mandated rates shouldered by Pandora and other streaming radio services — and that’s in spite of the fact that iRadio will reportedly offer users more control over what they hear than Pandora can offer using the government rate.

For example, on Pandora or any other “non-interactive” radio service, you can only skip six songs per hour.

We don’t know how many songs iRadio will let you skip per hour, or any of its other features — other than that whatever the rules are, they have been agreed upon by the major labels, publishers, and Apple, and that they likely differ from the standard rules, not just because Apple likes to “think different,” but because these separate agreements exist.

The NY Post says Apple is paying about half as much per song as Pandora and others who use the standard rates — which Apple apparently intends to make up for by sharing ad revenue and, of course, linking listeners to buy songs on iTunes. Some people are saying iRadio will be built into iOS as a standard app, which could lead to quite a few ad impressions indeed.

But where does that leave indie labels and recording artists — the ones that are too small to negotiate bespoke deals with Apple in advance?

One possibility is that Apple will pay the standard rates to indies, while paying another rate to majors. At least one other company does something similar already: Slacker, which recently announced profitability.

“We’ve got direct deals with the labels and more than 13 million songs, but for the small number of tracks not covered, we do pay the standard internet radio rates,” confirmed Slacker spokesman Austin Taczli to Evolver.fm.

Apple could do something similar — except for one thing: It reportedly wants to offer more interactivity than those rates allow. It would be weird, for instance, if you could only skip more than six songs in an hour if those songs were from major label artists.

Another possibility is that Apple is going to announce iRadio today as a concept, to make not only the developers in attendance at the Worldwide Developers Conference aware of it, but also independent labels and musicians, who could then choose to opt in if they want their music included. After all, Apple already has the requisite contact information and relationships with many of these artists due to iTunes, or through intermediaries like TuneCore.

We should know more about this later this afternoon. If Apple manages to unveil a new model for internet radio that not only major labels but independent artists join en masse, it wouldn’t be the first time it has changed the way an industry works.

  • Anonymous

    Yes, agreed. It will be extremely interesting to see how Apple handles this “hybrid” content licensing approach in terms of functionality within the service.

    Interestingly (and I’m sure intentionally), Led Zeppelin was the first band out of the gate in Apple’s keynote demo – a classic holdout from the on-demand services!