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Is Apple Screwing the Music Industry?

Stocks in this article: AAPLGOOGP

That's 10% of iRadio revenue only, not total iAd dollars. That's not much money at all.

For example, Pandora will generate $372 million in mobile ad revenue in 2013, according to eMarketer. Let's say that's what iRadio produces in its first year. Heck. Let's just say it generates $500 million. That means Apple pays Warner's publishing arm $50 million? $50 million to split up between everybody entitled to a cut equals next to nothing.

That's awful, yet Apple (and Google) can use that valuable music listening data in association with other parts of its business. It will undoubtedly help these companies do a better job targeting ads across their ad networks, not just on the radio product. They can combine this data with other consumption patterns, Maps data and, in Google's case, search data, to create a treasure trove that actually matters within the context of their primary businesses.


Yet, the music industry, directly responsible for this music data -- which, make no mistake, is vitally important -- only gets a sliver of that revenue. The sales attached directly to the radio product. It's perfectly logical to argue that they deserve more because they are absolutely responsible for the revenue their data help produce outside of radio, but within the larger ad networks.

Did any music industry executives bring this up during negotiations with Google and Apple? Will the companies still left to do deals bring it up? Or, maybe it has been addressed and is already part of the deal. Somehow, I doubt that.

The music industrial complex banks on increased digital music sales in the iTunes store (hardly a guarantee). And it -- again -- secures pocket change for publishers. Yet the labels rake in a sweet 16 cents per stream from Apple; more than Pandora pays under the compulsory licensing scheme.

Increased music sales mean nothing to Apple and Google. Tim Cook and Larry Page piss that type of money away on a Saturday night. It pays for the company Christmas party. It's all in the data . . . crucial data gleaned from a loss leader that fuels Apple and Google's empires while providing scraps to songwriters and such.


And the music industrial complex has a problem with Pandora? Remember, Pandora has loads of data and it's more than willing to share.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
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