Apple’s internet radio service delayed by Sony


ApplePandora must be smiling: The internet radio service from Apple is being delayed because of a disagreement with Sony. According to The NY Post, Sony/ATV (the world’s largest music publisher) couldn’t agree on a per-song rights fee with Apple.

Sony/ATV is said to be seeking a higher rate than the usual fraction of a penny per stream practiced by most internet radio services.

Apple’s plan to have its own music-streaming service built into the iPhone 5 was dashed when talks between the tech giant and Sony/ATV hit the last-minute snag. Those rights are usually tenths of a penny per stream, sources said. Sony/ATV was looking for a higher rate.

At the same time, Sony/ATV is about to set the music streaming sector on its ear as it will pull out of the two main copyright associations, ASCAP and BMI, in January, the story said.

Leaving the two groups will make it harder for companies like Pandora to negotiate future rights deals as well. Sony/ATV leaving the groups is the first big move it is making since a consortium it administers got approval to buy EMI Music Publishing.

With EMI under its power, Sony/ATV administers 2 million copyrights that include tunes from Taylor Swift to One Direction and embrace classic sounds such as The Beach Boys and The Beatles.

Sony/ATV’s rejection of Apple’s terms for its streaming service is a rare defeat for the company. Apple needed to negotiate rights from the individual rights holders and not simply from ASCAP and BMI as Pandora did because it was looking to operate a “souped-up” streaming service, sources told The Post. Apple also lacks recorded music rights from the labels.

Apple and the music labels have been cooking up a plan to create a radio service that adds a more human element to new music discovery.

Talks between Sony/ATV CEO Martin Bandier and Apple software and services President Eddy Cue had been moving ahead, sources said, and word even leaked earlier this month about Apple’s planned streaming service. In fact, the leak on 9/6 knocked 22% off the price of the shares of sector leader Pandora over two days.

While Pandora serves up songs based on algorithms, Apple’s talks with the labels involves an element of promotion based on what music labels are pushing in any one month, The Post said.

As we thought, the service will piggyback off of iTunes, since there are already so many members of that service. Said The Post: “Apple is talking about more flexible licenses than Pandora’s since it would allow the tech giant to point people directly to its iTunes store to generate sales. Apple’s streaming licenses would also allow it to play a selected artist more times than Pandora’s rights allow it to.”

The Sony/ATV snafu means music streaming is more likely to appear as an iPhone update in future months, sources said.

See The NY Post story here