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Would you listen to an Apple version of Pandora?

The Wall Street Journal reports that Apple is “in talks” to obtain licenses for what amounts to a Pandora-like streaming music service. All Things Digital says it’s true, or as ATD’s Peter Kafka puts it, “Industry sources I’ve talked to say that’s correct.”

I’m sympathetic to this reader comment on the WSJ piece:

“Oh great. Watch Apple’s inflated ego turn a great service into a proprietary application open only to appleheads who renounce God and proclaim their faith in rounded corners.”

All snark aside, the question is whether Apple could obtain better license deals than the ones that Pandora gets, which gobble a considable portion of the latter company’s revenue. Doubtless the answer is yes. The next question is why yes would be worth the effort for Tim Cook. Is this about money or empire building?

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One Response to Would you listen to an Apple version of Pandora?

  1. Michael Robertson September 7, 2012 at 2:46 pm #

    I do not think Apple can get superior licenses for a Pandora-esque streaming service and here’s why. Right now the government set rates are quite high. 0.2 cents per song for user for AM/FM simulcasters and 0.10 per song per user for internet only companies. These rates go up 9% a year to the end of 2015 after which new rates which have yet to be determined will begin. There will be hearings on those rates by the Copyright Royalty Board. The labels collection and enforcement arm SoundExchange has said they are requesting those rates to go up. Pandora has said they are too high and grossly unfair.

    The record labels will not negotiate with Apple new rates lower than Pandora because if they do, that negotiation between a willing buyer and seller could be entered into evidence during the rate setting process to justify a lower price. This would be detrimental to the labels because the CRB could set new statutory rates that everyone would get which would be lower than what is in place now. Any deal the labels did with Apple could be the rate everyone gets without any negotiation. That’s an enormous risk to labels. Better to let Apple go and use the same rates in place now that Clear Channel and Citadel get: 0.2 cents per song per user.

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