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Apple was planning to announce a custom music streaming service similar to Pandora during the iPhone 5 media event a few weeks ago. Negotiations with Sony/ATV stalled at the last minute, however, putting the plans on the backburner for now.
A report from the New York Post points out that Apple and Sony/ATV couldn't come to terms on per-song licensing fees before the September 12 deadline. Sony/ATV wanted Apple to pay more than the statutory rate that has been set for music played on the web because Cupertino wanted to enable listeners to play a selected artist more times. We're talking tenths of a penny per stream on average but of course, that'd add up quick given the number of iOS users in the wild.
Services like Pandora adhere to the standard rate which doesn't allow customers to repeat or play songs from the same artist consecutively like Spotify, for example.
Industry sources told CNET that music labels aren't particularly fond of streaming music platforms like Pandora because they don't produce much revenue and possibly cannibalize sales. They were reportedly hoping Apple's service would be more lucrative than existing streaming platforms.
Negotiations are ongoing but if Apple and Sony/ATV can't come to an agreement, Cupertino might have to resort to paying the statutory fee just like Pandora and launch a dumbed down version of what they initially wanted. This would result in a lose-lose situation as there'd be fewer listening options for the consumer and less profit for Apple and publishers.