Apple's iTunes Radio Terms With Record Labels Revealed

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Original poster
Apr 12, 2001
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The Wall Street Journal is reporting that Apple sent its iTunes Radio terms to independent record labels last week and the paper was able to review a copy of the contract. It dictates that Apple will pay record labels both in royalties on individual song plays, as well as how much advertising Apple is able to sell.
During iTunes Radio's first year, Apple will pay a label 0.13 cents each time a song is played, as well as 15% of net advertising revenue, proportionate to a given label's share of the music played on iTunes. In the second year, that bumps up to 0.14 cents per listen, plus 19% of ad revenue.
That's compared to the 0.12 cents -- $0.0012 -- that Pandora pays labels per play, although the paper says Apple will be paying publishers more than twice as much in royalties than Pandora. For streaming music, publishers and record labels are paid independently.

There are also restrictions in place that allow Apple to not pay royalties. Some song plays are unpaid if they are already in a listener's iTunes library or part of an album they own, tracks selected by iTunes for special promotion, or if listeners skip a song before the 20 second mark. However, Apple can only avoid royalties for two songs per hour per user.

And while these terms were sent out to independent music labels, the WSJ claims they are similar to the terms major labels like Universal Music Group and Warner Music have signed.

Apple doesn't expect iTunes Radio to generate much ad revenue, but hopes it will drive iTunes sales and help sell more iPhones, iPods and other Apple hardware. The company does hope it can help grow the iAd mobile advertising platform.

Finally, the paper says the terms include "several references to terms for the use of music in talk, weather, sports and news programming" on iTunes Radio and that Apple wouldn't have to pay royalties on music snippets used in those types of programming.

The WSJ believes it is "unlikely Apple will invest much in creating such programming, given that it has long shied from creating its own content".

The details offer a look into the terms long debated in the negotiation process between Apple and music labels. Apple reportedly agreed to higher royalty rates in early April, and then signed deals with the major labels in time to announce the new service at the Worldwide Developers Conference in early June.

Article Link: Apple's iTunes Radio Terms With Record Labels Revealed
 

levitynyc

macrumors 65816
Aug 19, 2006
1,100
3,235
Still don't see a point in Apple duplicating what Pandora already does so well.

Also, can someone please take iAd out back and shoot it?
 

rabidz7

macrumors 65816
Jun 24, 2012
1,203
2
Ohio
Why not just pay for your music. Everytime someone plays a song on these phony radio/spotify services, the artist makes about a cent.
Some one will definitely find a way to remove the ads.
 

singhjeet29

macrumors regular
Oct 9, 2008
248
12
Still don't see a point in Apple duplicating what Pandora already does so well.

Also, can someone please take iAd out back and shoot it?
...
Apple doesn't expect iTunes Radio to generate much ad revenue, but hopes it will drive iTunes sales and help sell more iPhones, iPods and other Apple hardware. The company does hope it can help grow the iAd mobile advertising platform.
This will reach more people than Pandora has ever had, overnight. And the music industry wants that.
 

gaximus

macrumors 65816
Oct 11, 2011
1,093
1,545
In the beta it won't play song with explicit lyrics. It bleeps them out, very annoying. Hopefully they will put in an option for this.
I would also like to be able to shuffle different stations together like on pandora, can't do that either.
 

Sky Blue

Guest
Jan 8, 2005
6,856
10
i like iTunes Radio, much easier to use than Pandora. No ads for iTunes Match customers too!
 

imgonephishin

macrumors regular
Jan 3, 2003
141
0
Everytime someone plays a song on these phony radio/spotify services, the artist makes about a cent.
That's pretty impressive given that the streaming companies are only paying the labels about one tenth of one cent per song.

Why not just pay for your music.
And who are you to tell other people how they would like to listen to their music? If people prefer listening to streaming radio, they'll do so. Markets will respond and the contracts will be hammered out. It's just the way the world works.
 

avanpelt

macrumors 68030
Jun 2, 2010
2,932
3,802
If Apple can only avoid paying royalties on two songs per hour, does that mean the end-user can only skip two songs per hour?
 

lk400

macrumors 6502a
Aug 26, 2012
754
224
...


This will reach more people than Pandora has ever had, overnight. And the music industry wants that.
And yet they want a higher percentage of each play by those more people. And I bet its because of them that its only in the US at launch. The music industry ideally wants to go back to pre MP3 and pre CD burner days.
 

lunaoso

macrumors 65816
Sep 22, 2012
1,332
54
Boston, MA
If Apple can only avoid paying royalties on two songs per hour, does that mean the end-user can only skip two songs per hour?
I'm pretty sure you get to skip 5 or 6 per hour, so Apple gets exempted from having to pay for 2 of those 5 or 6.
 

Dulcimer

macrumors 6502a
Nov 20, 2012
791
251
What's odd to me is that Apple is paying higher royalties than competitors. I thought that Apple could leverage deals with the music labels/publishers because of their strong iOS ecosystem and established iTunes presence in the music industry.
 

DisMyMac

macrumors 65816
Sep 30, 2009
1,087
11
I have a hunch there are similar deals between Hollywood and file storage sites. Really, how else could they survive?
 

ZeRoLiMiT

macrumors 6502a
Jun 6, 2010
839
84
Southern California
Apple is not getting as much as Pandora but how many people will switch to iTunes radio for $25.00 a year for iTunes Match + iTunes Radio or pay $4.00 a month for pandora? I bet A LOT of people are going to switch I know I did and a lot of people I know will be doing the same.
 

ftaok

macrumors 603
Jan 23, 2002
6,212
1,237
East Coast
I'm cheap, so I'll be using iTunes radio free. I'll put up with listening to an occasional ad. No problem. What I won't put up with are the pop up ads that cover up the app interface and other visual content (I'm looking at you, Pandora)

In the end, I'll switch from pandora Lite to iTunes radio because of the larger catalog. If there's no pop up ads, then thats a bonus. iTunes radio might be the feature that gets me to subscribe to match.
 

nsfw

macrumors regular
Aug 21, 2009
130
74
Why not just pay for your music. Everytime someone plays a song on these phony radio/spotify services, the artist makes about a cent.
Some one will definitely find a way to remove the ads.
A cent? Are you kidding? It takes 7 1/2 plays of a song to make one cent. (.01)
You know how much it takes to make $5,000? 3,846,153 plays.

I recommend you go google what Pink Floyd had to say about Pandora, et all.

I've talked to a couple smaller bands. They are big enough to play venues in most big cities and travel the world non-stop playing. They said they are making no money off their music anymore. It's all about getting out there and playing live and getting gate money as well as getting some extra money from merch they sell at shows.

To the extreme, you can read what Metallica wrote. Basically, they have to tour every year or they lose money on their infrastructure of management, attorneys, staff, studio equipment bills, etc..

It will be interesting to see what happens in the near future as more and more people move to these streaming services or just steal music outright.
 

lightz39

macrumors regular
Nov 30, 2012
178
1
I really hope this is available in canada... we take it in the you know what more often than not with stuff like this. I already have satellite radio and nearly 21,000 songs so it won't kill me if I can't use it. But I'm always on the look out for new music and this seems like a great way to find new stuff.
 

Jessica Lares

macrumors G3
Oct 31, 2009
9,303
806
Near Dallas, Texas, USA
iTunes Radio is great so far. Unlike Pandora and Slacker, it actually plays music that if you listen to that artist, you'd actually listen to. I haven't had the need to use the skip feature until after like 20 songs or so. That's REALLY going to help set them apart from the others, having that HUGE database of purchases and knowing their audience so well because of it.

People don't want to DISCOVER music, they just want to hear the stuff they like, and these other services don't seem to get that.
 

Ichabod.

macrumors regular
Oct 1, 2012
122
1
Rough, I assume the music industry will now try to leverage this to charge Pandora more as well.

Oligopolies are hard to fight.
 

mdriftmeyer

macrumors 68040
Feb 2, 2004
3,253
995
Pacific Northwest
These royalty rates are interesting. Looks like it could cost Apple a fortune?
It's not going to cost Apple a dime. They have just created a new stream of revenue for their advertising platform and with more purchases at the iTunes stores for actual album sales from listening to the artists its a win/win for Apple and the publishers.
 
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