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iTunes Radio Royalties 10x Higher Than Pandora

Husain Sumra:

The Wall Street Journal is reporting that Apple sent its iTunes Radio terms to independent record labels last week and the paper was able to review a copy of the contract. It dictates that Apple will pay record labels both in royalties on individual song plays, as well as how much advertising Apple is able to sell.

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.

That’s compared to the 0.12 cents — that Pandora pays labels per play, although the paper says Apple will be paying publishers more than twice as much in royalties than Pandora. For streaming music, publishers and record labels are paid independently.

As I suspected, iTunes Radio will be paying significantly more than Pandora. More than ten times as much, actually. While $0.13 may not look like a lot, keep in mind that the sale of a song generates only $0.70.