The launch of Google Music All Access last week proved to hammer another nail in the coffin for Apple’s own ill-fated music service, iRadio. On top of the frantically-paced development of streaming services which has seen the likes of Rdio jump into the Vdio arena and Spotify already popping the cork on their Australian one year anniversary, Apple’s absence in the race has been all the more pronounced, as have been their continuous and embarrassing failures to launch.
Almost right on cue, another roadblock has emerged for the IT giant’s iRadio, with music publisher gripes over the streaming service manifesting in a cold refusal to license Apple’s proposed radio streaming service.
Such publishers include Sony/ATV, the publishing company operated jointly by Sony and the singer Michael Jackson’s estate, and BMG Rights Management, the reinvigorated music division of German conglomerate Bertelsmann. All who are defiant on receiving better terms with licensing agreements.
However, this has not been the first time that Apple have had a run in with Sony/ATV. Late last year Apple’s iPhone 5 music streaming deal with the publisher was quashed by Sony/ATV, the incident subsequently delaying iTunes 11 the dispute stemming from an October 2012 debacle where the companies couldn’t come to an agreeable negotiation over a per-song royalty fee.
Apple also run into trouble over its proposed royalty rates for the iRadio service in March this year, deemed “too cheap” by industry figures criticising the iTunes makers initial offer of just US 6 cents per 100 songs streamed, half of what Pandora offers, and falling way under the standard set by the Copyright Royalty Board, at 21 cents per 100 songs streamed.
According to The Verge, who quoted an anonymous industry head, in this circumstance, it is not a selective grudge towards Apple per se, merely a retaliation towards the skewed “economics” which have defined the current digital music landscape of streaming. Apple’s absence in the race has been all the more pronounced, as have been their continuous and embarrassing failures to launch…
With digital sales reportedly reaching only 9% last year, the dwindling download rates have badly effected the pocket of publishers whose main source of revenue is gleaned from physical and download sales. Comparatively their say in the big digital scheme of things has been diminished by the increased popularity of subscription-based streaming which has eclipsed the more conventional formats of music sales, as demonstrated by the increased revenue made by independent labels via streaming services which brought in excess of $35 million in royalties last year.
The general trend of music publishers loss in revenue pronounced when compared to the label heavyweights; the profit margin between publishers and labels being extremely bias towards the latter. As outlined by Billboard, in the realms of “scan and match cloud services” from Amazon, Google, and iTunes, music publishers have a negotiated rate of 12% while labels on the other hand reap a meatier 58% of the revenue – leaving the ratio stakes publisher to label 1:5.
The ratio is even more unbalanced in the case of foundational radio stream service Pandora which sees labels entitled to 50% of the revenues and publishers a measly 4.1%. The ratio: 12-to-1 in the labels favour.
This power play of revenue distribution between labels and publishers has played out specifically in the iRadio troubles, Apple having recently finalised deals with record labels Warner and Universal with few qualms, despite disputes of low royalty rates earlier this year. The co-operation and concession of the labels to Apple proving a stark contrast to the aloof stance held by Sony/ATV and BMG Rights Management.
With music publisher’s begrudgingly drawing the short straw in streaming service dealings, it is the association with Pandora which has proven to be the same straw which has broken the camel’s back and subsequently soured any following dealings with emerging services based on the same model – iRadio being the unfortunate candidate next in line.
That being said Apple haven’t done themselves any favours in their marred association with The National Music Publisher’s Association, developed three years ago, as The Verge points out. At a media conference in 2010, Apple nearly contravened the collective rights of music publishers by almost publicly declaring their scheme to elongate the preview of iTunes songs to 90 seconds. such plans were delayed for an extra three months after the Association’s harsh warning of threatening to take away their license.
No doubt Apple are intent on wanting to stay in the publisher’s good books this time around. However, following Spotify’s increasing popularity which has been punctuated by their one year anniversary, and Pandora continuing its international dominance with over 200 million users worldwide, it seems the streaming trends may continue to stir the wrath of publishers – a circumstance which is, unfortunately for Apple, out of their hands.
