Apple gives labels twice as much as Pandora on iTunes Radio

During iTunes Radio’s first year, Apple will pay a label 0.13 cents each time a song is played, as well as 15% of net advertising revenue, proportionate to a given label’s share of the music played on iTunes. In the second year, that bumps up to 0.14 cents per listen, plus 19% of ad revenue.

That compares to the 0.12 cents Pandora pays labels per listen on its free service. Apple is also offering music publishers more than twice as much in royalties than Pandora does.

And Pandora is looking to pay less.

  • The magic variable in this are the songs you already own. Apple might be paying more per song, but they won’t be paying for every song; Pandora has no such exception. Furthermore, if you use iTunes Match, all the songs in your collection (that are also available on iTunes), legally obtained or not, count as songs you own. While Apple’s terms are more generous in a direct comparison, the reality is their exceptions will lower the actual amount paid per song. To put it another way, a million plays on iTunes Radio will not count as a million plays toward royalty payouts.

    • G

      But, in that case, the listener has already purchased the song, and could be listening to it endlessly without paying anything anyway. If they do “tune in” to iTunes Radio, it will naturally promote songs from the same artist. All of the songs the listener hears are guaranteed to be on iTunes for sale, and there will be direct links to buy with no chance of a broken abstraction layer. As an indie label, we’ve never expected to make big money from any of the streaming services. But as terrestrial radio circles the wagons, the promotional value here is the interesting part. (Granted, it may fall flat. We’ll see.)

      • I don’t see how that improves promotion over Pandora and other services. I bookmark tracks in Pandora all the time for possible purchase later. Those that are available through iTunes I buy through the link in the Pandora app. The rest I have to buy through other means, as I did when I asked Santa to fill out my collection of Tool. iTunes Radio won’t even play Tool.

    • GFYantiapplezealots

      Huh? Apple pays musicians with the iTunes Match money. It’s basically a way for musicians to get some money from pirates.

      • That’s a separate payment structure from the one being discussed. Presumably, artists will continue to be paid according to that deal, but it seems to negate royalties from iTunes Radio.

  • Aenean144

    Looks like they are colluding with music labels to raise prices for Pandora and other streaming services. Sounds like grounds for antitrust action! /sarcasm

  • According to the blog entry on Pandora’s site, the idea that they’re trying to pay artists less is F.U.D. I’m inclined to believe them over the PR firms the record labels hire to get this story out there. But who knows what the real story is.

    Whatever the case, Apple giving more money to the labels is going to put hella pressure on the other services out there. A few will probably die in the next year or so, starting with Google-who most likely would end up killing the service after a year or so anyway.