Apple said to be enticing indie labels for iTunes Radio

After securing the major music labels, it appears Apple wants to make deals with independent labels. And, the pay doesn't seem too shabby.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
2 min read
Apple's upcoming iTunes Radio. Apple

While Apple has sealed the deal with the three major music recording labels for its upcoming iTunes Radio service, the company is now looking to lure independent labels.

The tech giant has reportedly been talking to various indie music labels, letting them know how the royalty pay scale will work on the new service, according to the Wall Street Journal. Labels will be paid on how many listens each song gets, along with ads that Apple sells.

According to the Wall Street Journal, labels will get 0.13 cent every time a song is played and 15 percent of ad revenue in the first year of service. During the second year, labels will earn 0.14 cent per song and 19 percent of ad revenue.

This payment system could be a better deal for the labels than what rival Pandora offers. According to the Wall Street Journal, Pandora gives labels 0.12 cent each time a song plays on its service. But, it's still unclear if Apple's ad revenue could equal that of Pandora's.

Apple announced its free, streaming iTunes Radio music service at WWDC earlier this month. The service is ad-supported, although it will be ad-free to people who subscribe to iTunes Match, the company's cloud-based music library, which costs $24.99 a year. It will come built into iOS 7, the iPhone, iPod Touch, Apple TV, and iTunes on Macs and PCs. The service also comes with 200 stations built by the music team at Apple. iTunes Radio is scheduled to launch in the U.S. this fall and will roll out in other countries soon after.

Apple finalized deals with the three major labels and publishers earlier this month.

According to the Wall Street Journal, the deals that Apple is offering to independent labels are similar to those it has with the major labels. Apparently, in the deals, there are some exceptions when Apple doesn't have to pay royalties -- such as if the listener owns the song in their iTunes library, if Apple has selected the song for special promotion, or if the listener skips the song before 20 seconds have played.

CNET has contacted Apple for comment. We'll update the story when we get more information.

Correction on June 27 at 6:20 a.m. PT: This story originally misstated the amounts said to be paid to the indie music labels. Apple reportedly will pay out 0.13 cent in the first year each time a song is played and 0.14 cent in the second year, while Pandora reportedly pays out 0.12 cent. That is, payments per song play are in the hundredths of a penny.