Apple Signs Internet Music Deal with Warner; Sony Still Holding Out

Music Key
Music Key

Next Monday, Apple Inc. (NASDAQ: AAPL) kicks off its annual developer's conference, and the company would dearly like to announce an Internet music service at the meeting. To that end, Apple is reported to have signed a deal over the weekend with privately held Warner Music Group (WMG) for both publishing and recorded music rights. Google Inc. (NASDAQ: GOOG) uncovered its Google Play Music All Access Internet music service at its developer's conference last month.

The terms of the deal are believed to offer WMG a better deal than the company already gets from Pandora Media Inc. (NYSE: P). According to a report in Billboard magazine, Apple will pay WMB 0.16 cents per song streamed ($0.16 per hundred plays) and "an additional percentage of ad revenue that is more than twice the 4 percent rate paid by Pandora."

Apple also has signed a licensing deal for recorded music with Universal Music Group, but that deal does not include publishing rights. Sony Music Entertainment and Sony/ATV, the company's publishing arm, have not yet signed a deal for either recording or publishing rights. Sony and Apple are said to be far apart in their negotiations.

Any announcement from Apple related to "iRadio," as it is called, almost certainly will not come until the company has signed agreements with all three major music companies. Sony has rejected Apple's offers on at least two other occasions, and prospects are not favorable for a quick resolution this week.

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