Apple iTunes Radio License Terms Offer Indie Labels A Better Deal Than Pandora

Details are emerging about Apple’s licensing deals with record labels for its iTunes Radio service, which was recently announced at the company’s WWDC event. According to Billboard, Apple will pay indie labels 0.13 cents in royalties per song plus 15% of net advertising revenue in the service’s first year of operation; that’s a bit different than the deal it struck with the majors, which appears to be 0.1325 cents per song. In the second year, indie labels will get 0.14 cents and 19% of ad revenues.

The Wall Street Journal notes that Pandora pays out 0.12 cents and about half the advertising percentage Apple pays, so it would seem that Apple is giving labels a better deal. That’s not good news for Pandora, which is already publicly struggling under the burden of royalty payments.

Apple iTunes Radio License Terms Offer Indie Labels A Better Deal Than Pandora

Further, there’s been talk that Pandora has sought to reduce the royalty payments it’s making to artists--which Pandora founder Tim Westergren vehemently argues is a lie and a mischaracterization, stating that instead, Pandora is seeking to increase royalties for artists by “advocating for solutions that would grow total payments to artists”. (Those solutions would, presumably, somehow also reduce the money Pandora actually has to pay out; the inner workings of the music industry are strange and complex, indeed.)


It’s also worth noting that an apples-to-apples comparison between Pandora and iTunes Radio isn’t completely fair, because although both let users buy the music they’re listening to with a couple of clicks, Apple is the one selling most of those tracks.

That’s not to say that Apple is screwing anyone; setting up a streaming radio service to bolster your digital music sales is a no-brainer, and if you can do it better than the other guy, you win. That’s just how competition works. However, if Pandora goes down in part because of misinformation and skullduggery on the part of label bigwigs, as Westergen suggests, that would be a shame--and unfair to both Pandora and consumers.