Apple still negotiating with Sony over iRadio terms

iTunes 11 (Albums)

For months we’ve been hearing rumors regarding iRadio, Apple’s upcoming streaming music service. It was initially supposed to launch in Q1 of this year, but the company has reportedly been having trouble reaching royalty terms with the record labels.

Then in April came word that it had locked up a deal with Universal, putting the project on track for a summer release. But it seems to have hit another snag this week, as a new report claims that the other record labels are still looking for better terms…

From The Financial Times:

“Apple’s much-anticipated music streaming service has hit a stumbling block as label owners are split over the terms for what industry executives have dubbed “iRadio”.

Despite signing up Universal Music, the largest of the record label majors, the iPhone maker is still negotiating terms with Sony Music, the second-largest recorded music group, while it is close to reaching agreement with Warner Music according to people with knowledge of the discussions.”

The report goes on to say that Apple initially proposed a royalty rate to the labels at roughly $0.06 per every 100 tracks it streams, but it just bumped up the offer to $0.12 per 100 tracks—in line with Pandora. It’s not known what rate Universal signed on for.

But that’s not the only revenue Apple is offering the labels. The company is also willing to share a portion of its ad profits with them, and is guaranteeing a minimum payout over the course of the contract in the event that the royalties and ad money come up short.

As for the service itself, it sounds like it’s going to be more like Pandora than Spotify. The FT says that Apple plans to use user download history and other data to create a ‘custom’ music stream, allowing them to discover new music so they’ll (hopefully) buy it.

Obviously, this is all mere speculation until Apple itself announces the service. But given all of the chatter we’ve heard over the past several months, there’s way too much smoke for there to not be a fire.