iRadio's Interesting Royalty Rates

With Apple's new iRadio launch on the immediate horizon, everyone is interested in the royalty rates that it will be paying. Last week details of Apple's indie deals began to leak out, and they're pretty interesting, not only because of the rates they're paying, but because of what they won't be paying on as well. Here's what we've learned:

• The first year, Apple will pay $.0013 "per royalty bearing performance" (that's the key) plus 15% of net advertising revenue.

• That increases to $.0014 and 19% the second year.

• These rates are roughly comparable with what they're paying the majors, although slightly lower.

• It's more than from Pandora though, which pays $.0012 and no advertising.

But there's a catch. Apple drives a hard bargain, and there are some additional terms on what it will not pay on.

• Apple won't pay royalties on any streams during the initial 120 day beta period

• It won't pay on any "Complete My Albums" plays.

• It doesn't have to pay on up to 2 songs per hour if the tracks already appear in the listener's cloud collection.

• It may or may not pay on any Heat Seeker promotion at its discretion.

To be honest, these limitations don't feel unfair, since the company wants to ensure that the service gets off the ground by not paying during beta and paying a reduced rate during the first year. Regardless of these limitations, iRadio still looks like a better deal for the artist than Pandora even during the first year.

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