It isn’t news that Apple wanted to create a streaming-music service that would compete against Pandora. But now we are learning the back-story of why the idea was nixed – and it is a familiar refrain. According to a Friday morning news report, music publisher Sony/ATV wanted larger royalties for its songs…
“Sony/ATV, the world’s largest music publisher, and Apple couldn’t agree on a per-song rights fee, sources close to the situation said,” writes the New York Post.
Usually, a music service will pay “tenths of a penny per stream,” according to the newspaper. As a result, the music streaming feature likely will be seen in a future update for the iPhone, the publication said, citing unnamed sources.
Music publishers, however, were against the whole idea of Apple getting into music streaming. Indeed, a nearly identical situation occurred in 2010 when Apple’s Steve Jobs was about to announce iTunes would offer extended 90-second song clips.
“But publishers [raced] in and threatened legal action if Apple didn’t negotiate a new fee with them,” according to the site.
The desire for Apple to get into the music streaming business was evident on Wall Street.
When word leaked that Apple was considering such a move and that the Cupertino, Calif. firm’s Eddie Cue and Sony/ATV chief Martin Bandier were making progress in negotiations, Pandora stock value reportedly dropped 22 percent.
But unlike Pandora, Apple had larger plans than simply streaming music (iTunes Match now lets you download or stream songs, but it’s not a true music streaming service).
Apple’s planned service would allow users to play tracks from “selected artists more times” than permitted under the basic licensing which Pandora operated under. This would have required Apple to negotiate deals with individual publishers.
However, music labels were anticipating Apple getting into the market, since the iTunes maker wanted to promote songs based on what the music companies were trying to sell for that month, according to the Post.
The news that Sony/ATV was the roadblock isn’t too difficult to image.
After all, Sony and Apple are rivals in the consumer electronics space. However, the concern for the entire music industry should be that Apple is going to enter the music streaming area sooner or later. We saw where similar foot-dragging left the CD industry: in the bargain-bin, gathering dust.
What do you think?
Does Apple or music publishers have the upper-hand in a streaming music deal?