Apple is expected to sign its first internet radio licensing agreement with a major record label perhaps as soon as next week, multiple sources with knowledge of the talks have told The Verge. Universal Music Group, the largest of the major record companies, has reached the final stages of the negotiations and Warner Music is close behind, the sources said.
Apple is expected to launch a web radio service similar to Pandora's later this year, provided that executives there can strike an agreement with Sony Music Entertainment as well as music publishers. Talks with Sony, which operates the third label, Sony Music Entertainment and Sony / ATV, the music publishing company jointly run with the estate of the late singer Michael Jackson, are said to not be as far along towards reaching a deal. Last week, The Verge broke the news that Apple had made made substantial progress in the talks with Universal and Warner.
Apple will pay a royalty rate close to what Pandora pays
Spokespeople for all three music labels declined to comment. Apple spokesman Tom Neumayr, said the company's policy is not to commet on rumor and speculation. The new service, given the unofficial moniker iRadio by the media, is supposed to help iTunes users discover new music and boost sales of downloads as well as generate ad sales.
As for the financial terms, Apple will not receive the steep discounts it had sought for the labels' music. According to a story published last month in the New York Post, Apple initially offered to pay 6 cents per 100 songs streamed, or about half of what Pandora pays. Now, Apple will pay rates nearly "neck and neck" with Pandora, one of the sources said. But what mustn't be forgotten is that Apple's new service will be similar to Pandora's. but it won't be a clone. According to the sources, iRadio will come with more on-demand features.
Because of iTunes huge number of users, the new service is expected to be an immediate threat to Pandora. Since 2008, Apple has been the country's top music store but in the past year, streaming services such as Spotify and Pandora have come on strong. They offer streaming music to users so they don't have to worry about storing songs on their hard drives or pay per song. Pandora said this week that it now has 200 million users. Apple, meanwhile, has been using an older model of purchasing and storing music in the cloud, and so a proper webcasting service might be a boon for the company. In February, Apple reported that 25 billion songs had been purchased and downloaded from iTunes.