“A close look at the iTunes licensing agreement for indie labels shows iTunes Radio royalties have limited downside and strong upside,” Glenn Peoples reports for Billboard. “The minimum royalty calculation ensures labels will be paid a decent royalty until iTunes Radio becomes effective at generating revenue. iTunes Radio could be very valuable to labels if Apple can convince listeners to buy downloads at a healthy clip.”
“If iTunes Radio becomes extremely effective at generating revenue against its listener hours, it will share its success with labels,” Peoples reports. “The minimum royalty will exceed the standard royalty when iTunes becomes 171% more effective at revenue generation than Pandora is right now. In other words, [in] the event iTunes Radio revenues go through the roof, labels will not be stuck with a small share of the revenue.”
Peoples reports, “iTunes Radio’s impact really soars when download purchases are taken into account. The radio service will have a “buy now” button to allow the listener to purchase a song at iTunes while it’s playing on iTunes Radio. Since a single download is worth far more than a single stream, purchases can have a huge impact… Labels will find iTunes Radio royalties falling within a comfortable range. The per-stream royalty won’t be lower than the 0.12 statutory rate received from pureplay webcasters (as part of the Webcaster Settlement Act). If Apple can get just one download out of 1,000 streams, labels will get at least nearly twice that statutory rate.”
Read more in the full article here.
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Apple’s entire, non-negotiable iTunes Radio and iTunes Store contract posted online – June 29, 2013
Apple circulates iTunes Radio terms to indie record labels – June 27, 2013
Apple patent application reveals new iTunes Radio features – June 27, 2013
Why Apple chose iTunes Radio instead of a catalog streaming service – June 13, 2013
Apple announces iTunes Radio – launches this fall – June 10, 2013