It was reported last month that Apple was close to signing deals for its rumoured music streaming service, but now the Financial Times reports that the company has hit a wall in negotiations with key record labels. According to the publication, Apple has signed a deal with the largest record label, Universal Music, but Sony and Warner are still holding out for better terms.
As originally reported, Apple is said to have offered the labels half of the revenue stream that they would typically see from services like Pandora. The Cupertino-based company has now reportedly raised its royalty rate to match Pandora, however. It’s not clear if Universal accepted those terms, but the FT believes that the other record labels are looking for even more lucrative agreements.
Apple is reportedly offering three avenues of revenue to the companies, which include a royalty for every track streamed, a share of advertising revenue, and a “guaranteed minimum sum” over the course of the music contracts. Despite that, the labels believe that Apple should pay a higher royalty rate due to the potentially huge customer base the service would pull in.
The publication also provides more details as to what the music streaming service will entail. It outlines how Apple isn’t going to offer a service similar to Spotify to avoid eating into sales from the iTunes music store. Instead, Apple’s streaming solution will be similar to Pandora, serving up a custom station after entering an artist or band. The FT believes that Apple won’t charge anything for the service, with the company generating revenue through advertising.
[spotted at MacRumors]