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Royalties are only part of the negotiation. Apple is putting together a sweet deal for their partners. In addition to royalties, Apple may be offering as much as 50% of advertising revenue as well as a guaranteed minimum payment. If the royalties and ad revenues aren’t enough, Apple will pay a fixed amount. iRadio will also increase iTunes sales, which further increases revenues for record labels. These other revenue streams are important, because Apple will probably launch iRadio without advertising at first. iAd needs significant modification in order to work with audio streams. Offering ad-free music will also increase adoption at that crucial introductory stage.
Despite difficult negotiations, major labels will most likely go with Apple instead of signing exclusive deals with competitors. There’s a lot of competitors in this field, with rumors that Google and Amazon will be launching similar services. With 500 million iTunes subscribers and multiple revenue streams, it’s only a matter of time until final deals are cemented.
Not surprising, few bloggers and journalists are writing about independent labels. Researching this, I have found no mention of Apple’s plan for indie labels. Independent labels do sell music on iTunes. If iRadio is limited only to major label releases, it could be missing important content. Many independent labels have recently left Spotify, due to lack of revenue. If Apple can appeal to independent labels, as with iTunes, it could further differentiate its streaming service.
iRadio already exists! Launched in 1995, iRadio is an interactive, web-based radio platform. One can only expect Apple will be sued if they use the iRadio name, much like Cisco sued them for using “iPhone”. Apple has deep pockets, and iRadio is a small operation. They only have a PageRank of 4. One can expect Apple to settle and purchase the iRadio name. Perhaps Apple’s streaming music service will have another name (iTunes Radio, iTunes Streaming), however, iRadio fits the pattern of Apple product names. It’s the name that everyone expects.
iRadio is set to debut this summer. Due to slowdowns in negotiations, the service’s launch may be postponed. Reading comments on iRadio news articles, many people don’t think it is a big deal. After all, one can already listen to Internet radio, and there’s Pandora, Spotify, and myriad other offerings. Owners of Apple products can use iTunes or the Radio content channel on Apple TV. For those with iOS devices, I recommend TuneIn radio. It’s a great app and an exceptional value. The regular version is free, and the “Pro” version offers an ad-free experience as well as the ability to record playback.
Although there are many music streaming services, there is room for improvement. I expect Apple’s iRadio service to be a best-of-breed. It will have the features of Spotify and Pandora, with exceptional audio quality and the ability to tailor music selections based on your iTunes library. Apple is large enough to make critical deals for content and deliver feature-rich functionality.
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