The Wall Street Journal reports that Apple signed a deal over the weekend with Warner Music Group to set up the payment structure for a to-come streaming service. The Journal’s sources says that Apple is upping the ante on the likes of Pandora by offering double the percentage of ad revenue Pandora offers to publishers like Warner.
Apple is still negotiating deals with other industry biggies like Universal and Sony. Given the huge size of these companies’ catalogs, Apple would need them to be on board in order to launch a competitive service, but the Warner deal may be the one that sets the tone for the rest.
It’s possible that the service could be announced as early as next week, though, considering that Google announced its streaming service on the same day it launched, Apple might wait until it has all its musical ducks in a row.
Meanwhile, Apple goes on trial this week for its alleged part in e-book price-fixing. While all the publishers involved in the suit have settled, Apple has maintained it was not involved in any collusion to change the e-book pricing model from a standard wholesale one — in which the retailer buys at a discount and sets whatever price it desires — to a so-called “agency” model, in which the publisher determined the retail price with the seller getting a fixed percentage.
Apple and the publishers were accused of working together behind closed doors to switch to this model in a deliberate attempt to undermine Amazon’s massive share of the e-book market. The publishing industry has long claimed that Amazon strongarms publishers into bottom-dollar deals, while Apple was beginning to market its then-new iPad as an alternative to Amazon’s Kindle e-reader and wanted customers to buy e-books from the iTunes store.