What's Apple giving record labels in exchange for their content?
We've been hearing talk of a Pandora-like radio service from Apple for a really long time. Apple finally confirmed the rumors at WWDC 2013 earlier this month, but that doesn't mean we have all the information. We know that iTunes Match customers will get it ad-free, while the rest of us will have to make do with the free, ad-supported version. But what kind of deal is Apple cutting record companies?
The Wall Street Journal reports that Apple circulated its terms to independent record labels last week in preparation for the launch. According to the Journal, Apple plans to give labels royalties based on two parameters: how often songs are played and how much advertising the Cupertino-based company sells. Royalties and ad revenue for the first year will be 0.13 cents for each play and 15 percent of net ad revenue. WSJ reports that this will be proportionate to labels' shares of the music played on iTunes. Those figures will jump to 0.14 cents and 19 percent of ad revenue for the second year.
So, that's what Apple will pay for, but the company won't be paying for songs skipped before 20 seconds of the track has elapsed, nor will it pay royalties for songs already owned by the listener. Apple will only be able to skip out on royalties twice per hour per user.
These terms are said to be similar (though not identical) to the terms given to major record labels. And, despite all of this new information, we still don't know when Apple plans to launch iTunes.