This isn't the first time that an impasse between Apple and Sony has been rumored. Earlier this year, talks between the two firms were going nowhere preventing Apple from launching its service around the Grammy Awards which were held in February. Part of the problem is that Apple had originally offered the labels 6.5 cents for each 100 songs streamed which is half the rate that Pandora pays. The labels rejected this offer and Apple subsequently raised its offer to 12.5 cents for each 100 songs streamed. It is not known how many labels agreed to that rate. The problem for Apple is that the record labels see the iRadio service as being a big hit for the Cupertino based tech giant, and feel that they should be sharing in the rewards.
For its part, Apple is said to be offering the labels a combination of a licensing fee based on the number of streamed tracks and a share of advertising revenue. Apple is also proposing a guaranteed monthly payment to the labels in case iRadio doesn't do as well as predicted. The service is expected to be offered free with Apple making money from advertising.
source: FinancialTimes via AppleInsider