Apple nearing deal with labels for Pandora-like music streaming service

By on April 5, 2013, 11:19 AM

Speculation about a music streaming service from Apple has been going on for quite some time. The rumored addition would presumably complement the company’s download model on iTunes, but apparently one thing holding it back all this time is Apple’s stringent demands as well as labels’ unwillingness to play ball after feeling short-changed on their previous dealings. That could change soon, according to Cnet.

A new report cites “two people familiar with the negotiations” claiming Apple is very close to striking a streaming deal with Warner Music and Universal Music. The company would still would have to sign a deal with Sony but snagging two major music labels might be enough for their launch target of summer 2013.

The new streaming service would go up against the likes of Spotify and Pandora, although Cnet’s sources say it most closely resembles the latter since Apple won’t offer on-demand listening. That said, they will throw in a few unique features compared to Pandora, such as the ability to jump back to the beginning of a song.

As far as fees are concerned Apple is flexing its muscles as the dominant player in the music business. The report claims they’re negotiating a per-stream rate that's half of what Pandora currently pays labels, with the promise of new revenue channels to make up the difference. This includes a quick way for consumers to buy a song they hear -- where Apple also takes a cut per sale -- and incorporating audio ads into the free service.

Apple and the labels are still hammering out what the revenue split for ads would be, but labels are reportedly pressing for 35 to 45 percent in order to agree to the lower per-stream revenue.

If everything comes into place, Apple’s annual Worldwide Developers Conference, which is expected to take place in June, could be the ideal stage to announce the new service within the rumored summer timeframe.

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