Apple has sent out contracts to independent labels detailing its iTunes Radio terms.
The Wall Street Journal is reporting that Apple will be paying a higher rate per song than competitor Pandora, and it will also offer additional ad revenue too.
Apple will pay independent labels $0.13 every time someone streams a song, which will increase to $0.14 after the first year.
Pandora currently only pays $0.12 per stream.
Apple is also offering to pay labels 15% of its net ad revenue, proportionate to the label’s percentage of total iTunes Radio streams.
When songs are skipped before the 20 second mark, Apple won’t have to pay for that stream. The company is only allowed to avoid paying for at most two streams per hour.
If an iTunes user already owns the song that’s being played, Apple won’t have to pay labels for that stream either.
Similar terms have been outlined for the major labels. Apple will be paying a cash advances to cover future royalties.
Apple’s sheer size advantage over Pandora enables it to offer higher rates, though there’s a chance that labels have negotiated higher pay after having already gone through the process earlier with Pandora.
The Wall Street Journal asked Pandora founder Tim Westergren what he thought about Apple’s terms.
“It’s apples and oranges,” Westergren said, arguing that the two services vary in opportunities for royalties, and shouldn’t be compared.
It looks like music labels might prefer apples though. They seem to pay more than oranges.