Should Apple actually succeed with its alleged plan to start up a Pandora-style streaming radio service
, one of the biggest obstacles the company faced may be behind it
as early as next week, if a report on The Verge
is true. Multiple sources say that Apple and Universal Music Group, one of the "big three" music labels, have reached an agreement on streaming royalties -- and that the company is in the final stages of also closing a deal with Warner Music. The third major label, Sony, is an earlier stage of the process.
Rumors of Apple's streaming service have circulated for months
, though few details of exactly how it would work have been made clear. It isn't even known if the service will simply be an expanded service of iTunes or a separate, subscription-based service; will offer a large streaming library like Spotify or an algorithm-curated selection of songs based on the user's tastes, like Pandora; an alternate front-end to iTunes buying, or a revolution in the largely-staid and financially-strapped Internet radio industry. Despite this, the service -- called 'iRadio' by the media -- is highly likely to change the landscape of the industry, and may become more than just another way to buy music easily and digitally.
According to the report, Apple's initial low-ball offer
on royalties -- said to be about half of what Pandora, widely thought to be one of the best deals in the industry, pays -- was not accepted, and now the iPhone maker has agreed to pay a rate much closer to the Pandora deal. Royalties deals for Internet-only "stations" like Pandora have been a crippling factor in the industry, with most major services struggling to attain profitability. Apple, with its 400 million accounts (most with credit cards attached) and complete musical eco-system that can sell songs and albums, may have the key
to making Internet-only radio streaming a viable business that benefits artists, record companies and consumers.