Sony/ATV Refuses to Bow to Apple’s Whims

Apple’s (NASDAQ:AAPL) plans to launch a music streaming service have been stalled for the moment after talks with Sony/ATV Music Publishing fell through over the cost of streaming rights. The service, aimed to be a direct rival to Pandora Media’s online radio (NYSE:P), was initially set to be launched alongside the iPhone 5, the New York Post said.

Sony/ATV, which is the world’s largest music publisher, wanted a higher per-song rights fee than the current standard of tenths of a penny per stream, the report said. Apple, in turn, wanted to pay lower fees with the justification that its proposed program would be more flexible for the publishers than the custom radios of Pandora, Spotify, or Clear Channel’s iHeartRadio.

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Apple, whose negotiations were led by senior vice president of internet software and services, Eddy Cue, argued that its service would allow content providers to play songs they wanted to promote, instead of relying on the user’s choice. Apple was also aggressive about offering its iTunes store, which lets users buy tracks or albums, as a linked service.

In addition, things could get complicated for Apple as well as services like Pandora if Sony/ATV goes ahead with its planned pullout from copyright associations Ascap and BMI next year. That will force the streaming service providers to negotiate unilaterally with publishers.

Earlier this month, The Wall Street Journal reported on Apple’s plans to launch the streaming service, sending Pandora’s stock plunging. The report said Apple planned to offer the service on its own mobile devices and computers and possibly on Microsoft (NASDAQ:MSFT) Windows PCs, but not on smartphones and tablets running Google’s (NASDAQ:GOOG) Android software.

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