Apple Reportedly Close to Signing Streaming Deal with Universal

| Analysis

Apple could sign a deal for streaming music rights with Universal as soon as next week, according to unnamed sources cited by The Verge. The deal would put Apple one step closer to being able to launch a streaming radio service, something the company has reportedly been wanting to do for some time.

Streaming Radio from Apple Could Be Close

There have been multiple stories about this development of late. On April 5th, it was reported that Apple wanted a licensing deal with Universal that would shift payment away from an emphasis on per-stream payments with a mix of revenue sharing.

The Verge's sources say that's out the door, and that the new deal has Apple paying rates that are "neck and neck" with the rates being paid by current leaders Spotify and Pandora. That rate is about US$0.12 per 100 streams.

iTunes is king of music sales, but streaming services like Pandora and Spotify have both been popular. An iTunes-branded service could take immediate share in this business, and if Apple thinks it can sell ads—probably through iAd—it could make money for the company and further strengthen the iOS ecosystem.

Apple also has the ability to make it easier for users to buy tunes that they like, pumping them directly to iTunes to make the sale. Some reports have said that this was a big part of Apple's business model, and it's an advantage the existing—yet much smaller—competitors simply don't have.

Image made with help from Shutterstock.

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4 Comments

markjones

So basically, the labels want the fixed .12 and don’t want the potentially much bigger rewards and risks that come from selling ads.  Someday the ad portion of this business will generate way more than 12 cents, and the labels will be demanding a cut, just like how they wanted a cut of device sales.

Dave

Signing or singing?

Bryan Chaffin

I think I need Dr. Freud to edit my titles…

Thanks for catching that, Dave. I corrected the title. smile

ctopher

Markjones - Is there a lot of money in ads for streaming music? We use Pandora some for dinnertime background music and the ads are few and pretty lame (no major companies that I can recall and a few PSAs).

I’m also leery of the “Oh, I love this song, I think I’ll buy it” business model. Do kids do that these days? I’m not in the demo, but the 18-30 folks that I know don’t buy much music.

Oh and Bryan, if Apple made that radio in the picture, I’d buy it! (I’m a closet AM DXer) This is one of the reasons I go to TMO. I just like it for the pictures!

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