Digital Top Stories

iTunes Radio indie label agreement provides insight on functionality and terms

By | Published on Thursday 27 June 2013

iTunes Radio

A copy of the basic licensing agreement being provided by Apple to the indie labels for its in-development iTunes Radio service has fallen into the hands of Billboard, and it reveals various bits of information about how the service will work, and how labels will be paid for the use of their content.

According to the trade mag, in terms of functionality users will be able to skip up to six songs per hour, and pause and play music, though they won’t be able to rewind or restart tracks. Obviously these limitations – which make the new iTunes service a Pandora-style ‘interactive radio’ platform rather than a Spotify-style on-demand service – are key, in that they allow Apple to secure more favourable terms from the rights owners.

In terms of those terms, Billboard says that – according to the agreement the publication has seen – Apple will pay indie labels $0.0013 per play plus 15% of net advertising revenue, with that due to rise to $0.0014 per song and 19% of net advertising revenue in year two. Although no royalties will be paid during a beta period of up to 120 days, and no royalties will be due on skipped tracks, which must be skipped in the first 20 seconds of play.

It’s thought that the deal being offered to the indies is pretty much in line with that secured by the majors, though per-play royalties are very, very slightly less – though $0.000025 more per play still gives the big labels an advantage if and when the streaming platform is servicing millions of streams a day.

Read more about the contract on the Billboard site.



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