With its stock soaring to nose-bleed levels and its devices dominating the headlines and markets, what more could the folks at Apple do? Well, how about further disrupting the music world, with reports that the wizards of Cupertino plan to develop an internet radio service (read it here). That would put Apple in a run for the money with providers like Pandora, Spotify, Slacker and Clear Channel’s iHeartRadio. And while web-streaming radio-servers have attracted audiences, the revenue hasn’t been so great. So what’s Apple up to and how do the legal rights to the music itself play into this deal? According to GIGom, Apple is just trying to keep its customers happy and hooked in.
Tim Westergren, founder of Pandora, says his license prohibits his product from much customization. Pandora isn’t actually licensed directly by labels-artists; they, rather, have a statutory license through the government. The webcaster license does not allow for ‘on demand’ streaming — hence the inability to ‘rewind. ‘Pandora has more than 900,000 songs in its database from 90,000-plus artists and, if you want it click here.
The “performance complement” was adopted in the DMCA in 1998 and limits a webcaster under statutory license from playing too many songs by the same artist in a limited period: No more than three songs can be played in a row by the same artist; no more than four songs can be played in a three-hour period by the same artist; no more than two songs from the same CD can be played in a row; and webcasters cannot promote exactly when a song will be played in the future. You can read more about this here
from David Oxenford.
Such limits don’t sound like what we know Apple might accept. So could it turn to other business models?
MOG (Music on the Go) is a paid subscription online music service founded by David Hyman. Check it out here
. MOG claims that it is “100% legal
” having licensing agreements with every major music label and thousands of independent labels, thus providing legal access to a vast catalog of more than 16 million songs. Similarly, Spotify is a Swedish music streaming service using licensing agreements with more than 15 million songs. (Check it out here
Some independent artists have complained that they are inadequately compensated but Spotify replies that 70% of its revenue is paid out in royalties. In the race to be the server with the most offerings, Spotify just announced that it is in negotiations to stream HBO Nordic content to Scandinavian customers.
, another music-streaming service, has license deals with Sony BMG Music Entertainment, EMI, Universal and Warner along with indie labels and top music publishers. This allows its users to save songs from Slacker radio stations for later playback.
As for iHeartRadio (check it out here),
it ranked No. 4 on AdAge’s Entertainment A-List
in 2010 and says it offers access to more than 800 Clear Channel live-radio stations streaming on-line.
So which path will Apple rumble down? It is rumored to be seeking direct licenses with record labels and it’s too early to know if Cupertino will offer a free or subscription service or how it will handle advertising. But where the company with the nation’s maximum market valuation heads, others are sure to tremble.
Cydney Tune and Christopher Lockard have written in detail about licensing and royalty requirements for webcasters. You can find more information here