record labels

In an effort to boost usage of its new streaming music service that launched alongside iOS 7 last fall, Apple is considering changes to iTunes Radio. The Cupertino company is now testing iTunes Radio as a standalone application with iOS 8, according to sources briefed on the plans. iTunes Radio first arrived as a feature within the iPhone, iPad, and iPod touch operating system’s Music application. As a tab in the already-existing Music app, iTunes Radio has not received a promoted presence on iOS, and this likely has deterred growth for the service in terms of advertising revenue and usage…

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Leading up to the unveiling of Apple’s new iTunes Radio service earlier this month at WWDC, we reported on some small details regarding deals Apple had reached with the major labels necessary to get bring its Pandora competitor to market. Earlier reports claimed that Apple was paying Warner around 10% of ad revenue— that’s around twice as much as Pandora reportedly pays. Today, The Wall Street Journal provides us with some in-depth info on what Apple is paying labels and publishers after taking a look at the terms of the deal.

Apple will in fact be paying well over the 0.12 cents per listen Pandora offers the labels, as well as a percentage of ad revenue, and the payout will also increase during the service’s second year:

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.

However, there are some exceptions. The report notes that Apple won’t have to pay royalties for songs that users already have in their iTunes library. That will apparently extend to “songs that might be on an album that a listener owns just part of.” Interestingly, Apple also won’t pay for songs skipped before the 20 second mark and those included in special promotions, but it can only skip paying royalties on two songs per hour for each iTunes Radio user:
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