Sony/ATV, the world's largest music publisher, and Apple couldn't agree on a per-song rights fee, sources close to the situation said. Those rights are usually tenths of a penny per stream, sources said. Sony/ATV was looking for a higher rate.
At the same time, Sony/ATV is about to set the musicstreaming sector on its ear as it will pull out of the two main copyright associations, Ascap and BMI, in January, executives close to the matter said. Leaving the two groups will make it harder for companies like Pandora to negotiate future rights deals.
Notably, Apple was planning to integrate its service with iTunes for song purchases and would have allowed more song plays than Pandora. It's expected that the streaming service will appear in a future iPhone update.
"They didn't put whatever they needed to put in the app," said one source familiar with conversations. "It seems they were rushed into it."