Apple's new streaming radio service - why it won't reach the UK
Apple are apparently launching a Pandora competitor, but the price of music makes it impossible for it to launch in the UK.
There is almost zero chance of this happening in the UK... and here's why. The music rights organisations make it impossible to run a profit-making online radio business here.
This is why you don't see Pandora on these shores: and, as I commented in April this year...
PPL tell me that "0.0796 pence per-track-per-stream was the published rate of PPL’s Customised Webcaster Licence in 2011″. They don’t publish this figure online. PRS’s website quotes a rate of 0.065 pence per-track-per-stream. So, if you were running Pandora in the UK, you’d pay a total of 0.1446 pence per track played on music bills. According to a Twitter conversation, 15 songs would be a sensible amount of songs to play per hour, assuming a light ad-load and no presenter or news. So, an hour of Pandora would cost them, on their PRS and PPL bill, 2.169 pence per listener, per hour.
Yet, as I also commented:
The RAB have published that commercial radio annual revenue based on Q4 2011 was £532.5m. RAJAR reports that Q4 2011 had a total of 479,856,000 hours per week spent to commercial radio; or 25,021,062,857 hours a year. So we can work out that commercial radio revenues are 2.128 pence per listener, per hour.
So, once more, UK radio can relax. Since the UK music rights bodies would like more money in music fees than the entire radio industry earns in total revenue, the UK radio industry can dodge the bullet once more. An advertising-funded free-to-air Apple or Pandora service couldn't even afford to pay for its music, let alone for its bandwidth, its marketing or its corporate tax. It won't launch here: at least, without a subscription model.
And, while there are plenty of subscription music services (like Spotify's £4.99 service), it's unlikely that a service that isn't free-to-air would pose a threat.
Broadcast radio in the UK pays roughly 10% of its revenue on music costs. Yet, for a pure-play personalised internet radio service, it would appear it's at least ten times more. Could it be that radio's biggest ally is, in fact, the music industry?
James Cridland is the Managing Director of Media UK, and a radio futurologist: a consultant, writer and public speaker who concentrates on the effect that new platforms and technology are having on the radio business.
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I read the story in the NY Times and they said that Apple were “in the early stages of negotiating with the major record labels”.
If they managed to negotiate a lower fee with the labels than the PPL rate, then maybe they could launch in the UK.
It’s a big ‘maybe’ as, so far as I know, individuals aren’t allowed to negotiate a lower publisher royalty than the PRS one. So – they’d have to do a great deal with the labels and undercut the PPL rate hugely, to make it work here.