Apple will pay royalties for iTunes Radio based on both how many times listeners hear a song, and how much advertising Apple sells, according to a report. iTunes Radio will pay labels 13 cents each time a song is played, in addition to 15 percent of net advertising revenue, “proportionate to a given label’s share of the music played on iTunes.” The rates will rise to 14 cents and 19 percent of ad revenue in the second year of iTunes Radio. These rates exceed the 12 cents per listen paid by Pandora, which is very similar to iTunes Radio.
It’s notable, however, that a number of songs played on iTunes Radio will be exempt from paid royalties. These include songs already in a listener’s iTunes library, songs on an album that is partially owned by a listener, and “Heat Seeker” tracks selected for special promotions. Apple also avoids paying royalties for songs skipped before 20 seconds have played, but the company can only avoid royalty payments for two songs per hour. These terms, given to independent labels, are “similar but not identical to” the terms given to the three major labels — Universal Music Group, Warner Music Group, and Sony Music Entertainment. There are also references to terms regarding the use of music in talk, weather, sports, and news programming on iTunes Radio, but the report notes “it’s unlikely Apple will invest much in creating such programming.” [via The Wall Street Journal]
