The word is that publisher Sony/ATV caused Apple to pull the plug at the last minute because it could not agree on the per-song rights fee. Considering that Sony/ATV administers 2 million copyrights, including those by everyone from Taylor Swift and One Direction to the Beach Boys and Beatles, the company supposedly push for a higher rate, and Apple had to wait until things could get ironed out as a result.
That was bad enough, but it happened again in October when Apple introduced its iPad Mini, when once again, Sony/ATV refused to sign off on a deal.
It's been said that the iPad Mini is an especially good fit into Apple's long-term strategy of being a media controller, so the streaming music announcement would've fit nicely with that, but once again it was not to be. Look for this to be resolved soon, but Sony/ATV looks like it's driving a hard bargain, which hopefully will be good for its songwriters.
In the meantime, Pandora's stock is taking a beating and it's execs are selling off their shares. Everyone sees the writing on the wall as the 800 pound gorilla prepares to enter the market.
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