Amazon is reportedly in talks with major music labels with the aim of releasing a music service in the future, hoping for low rates much as Apple did when negotiating for iTunes Radio.
One label source reports that Amazon isn’t close to getting a deal done, because its executives are asking for a substantial discount on the pricing the labels have given to other services, like Spotify, Rhapsody and Beats.
Still, label talks have been going on for the past few months, sources say.
Amazon already offers its Amazon Prime subscribers a Netflix-style movie and television streaming service – Amazon Instant Video – but music could entice customers to pay more. Earlier this year, Amazon said that it may be raising the price of Prime by up to $40, increasing the cost of the service from $79.99 to $120. Amazon already offers a Cloud Player service for playing music purchased or stored using its Cloud Drive, which is similar to iTunes Match.
Last year, Apple released its own streaming music service, iTunes Radio, which is built into the Music app of iOS 7. The service is radio-based, allowing users to discover new music through stations based on specific artists and songs, much like Pandora. It is unclear whether Amazon's service would mirror Apple's, or if it will more closely resemble services like Spotify, which allow users to search for and play specific songs.
Like Amazon, Apple was originally aiming to pay lower prices than the industry standard at six cents per 100 songs streamed, or half of Pandora's royalty rate, but the company was unable to reach deals with music labels at such low rates. Apple ended up agreeing to pay labels 0.13 cents for each song played, along with 15 percent of net advertising revenue, and it is likely that Amazon may have to make similar pricing concessions to bring a music service to fruition.
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