News.blog: Apple rethinks revenue sharing?

Is Apple rethinking its music strategy?

As part of a deal to offer devices featuring preprogrammed music, Apple would have to agree to share sales revenue from the devices with the labels, says a source close to the deal. Cutting the labels in on iPod or iPhone revenue would mark a sharp turn in Apple's strategy.

The deal being discussed by the labels and Apple calls for the company to licence the music and also "kick in a piece of the device sales", said the source. The Apple device, which hasn't been determined yet, would come preprogrammed with a certain amount of music that after a period of time, perhaps six months or a year, would roll into a subscription type of service plan, the source said.

Apple began informal discussions six months ago with Universal Music Group, the largest of the four major music labels, about offering preloaded music on devices, according to the source, who requested anonymity. Talks began in earnest two months ago, the source said, adding that Apple has opened discussions about the offer with all four of the major labels.

An Apple representative said: "We don't comment on rumours and speculation." Representatives from the four top record labels either did not return calls or declined to comment.

The talks are still in a preliminary stage and nothing has been decided, the source said. The Financial Times was first to report on the negotiations between Apple and the record companies.

The service being discussed is similar to one struck between Universal Music and Nokia last year. In December, Nokia announced its "Comes With Music" service, which allows users to buy a Nokia device preprogrammed with a year of unlimited access to a subscription service featuring Universal's songs.