Apple Defines iTunes Radio Terms for Record Labels

According to a report, the deal Apple is looking to score with independent record labels for its upcoming iTunes Radio service has been revealed. Based on The Wall Street Journal, Apple sent out terms to independent record labels last week which detail per-play rates, royalties and ad revenue the Cupertino California company plans to mete out in return for content access. 

For the first year of iTunes Radio, Apple is willing to pay 13 cents each time a song is played, adding 15% of net advertising on top of that, dealt out proportionately to a label’s presence on the service. The publication went on to say that rates will be going up to 14 cents per play and 19% of ad revenue in the service’s second year. The offer is a bit more enticing than the 12 cents Pandora pays out per each song played. Apple is also said to be offering more than twice as much in royalties when compared to the Internet radio giant. 

Exemptions from the generous terms are royalties on select tracks that are already in a user’s iTunes library as well as “Heat Seeker” content which is to be selected by Apple for use in promotions. Songs that listeners skip within the first 20 seconds are also exempt, with a limit of two songs per hour, per user. 

The Wall Street Journal said the independent label terms are similar to those granted to major companies Universal Music Group, Warner Music Group and Sony Music Entertainment. The “Big Three” are expected to receive cash advances. People who claim to be familiar with the matter said Apple is using iTunes Radio to sell songs through the iTunes music store, as well as move mobile devices like the iPhone and iPod.

Apple previously announced iTunes Radio at its Worldwide Developers Conference earlier in June, noting the ad-supported free service will launch this fall on iOS 7 compatible devices such as the Macs, Apple TV and Windows machines. The service is said to feature customizable stations much like Pandora but will have an added benefit of tapping into a user’s past purchased from iTunes for the purposes of personalization.

Is iTunes Radio something you are excited for trying out?


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