Recent reports claim Apple is close to making a deal with two major record companies to stream their respective tracks on a purported “iRadio” music streamer, with the arrangement said to be more lucrative for labels than existing rates paid out by Pandora. Citing people who seem to be familiar with the situation, CNET reports that Apple’s supposed deal will offer cheaper per-stream rates equivalent to about half of what Internet radio giant Pandora pays and it will also include additional sources of income for record labels.
The sources are saying Apple plans to leverage the installed iTunes user base to drive further revenue for record companies participating in the “iRadio” initiative. One method employs an easy way for listeners to buy a song they hear on the music streaming service with the option being to cut labels in to a revenue sharing scheme of audio ads that Apple is planning to launch with the service.
Although rumors have been circulating for months, sources are claiming Warner Music and Universal Music Group could possibly ink a deal with Apple within the next week. The same people also reported that the arrangement is so tenuous that the deal might fall apart as there are many concerns being aired over the proposed added revenue model. According to one source:
The only thing concrete is the per-play-rate. If you end up having no ad revenue, that’s still zero. And we won’t know what the buying habits will be. Will people streaming still take the time to buy from iTunes?