The details of Apple's iTunes Radio contracts with record labels have been leaked, with the terms perceived to be more attractive to labels than what existing streaming radio service Pandora offers.
Launched recently after much speculation, and without Australian roll-out plans, the Wall Street Journal has reviewed the contract supplied to American labels and found that Apple will pay labels a mixture of 'cents per listen' and a cut of the advertising revenue.
In the first year Apple will pay rights holders 0.13 cents per stream plus 15 percent of net revenue, which will bump up to 0.14 cents per stream and 19 percent of net revenue in the second year. However as Billboard points out Apple are guaranteeing labels a minimum royalty of 0.142 cents per stream if the service generates no revenue.
Pandora is believed to pay 0.12 cents per stream on its free service and 0.22 cents per stream for its subscription service. Speaking to the Journal Pandora founder Tim Westergren said that it is not accurate to compare the royalty fees of the two services as they work differently and offer royalty payments through different methods.
Apple's iTunes Radio will not pay royalty fees for tracks streamed by a user which are already in their iTunes library.
The explosion of streaming services in Australia over the last 18 months has prompted intense scrutiny of the services, particularly those of internet giants Apple and Google who will likely launch locally later this year. A recent report into the viability of the companies found that the companies should be looking to slash artist royalties if they want to be attractive to investors.
