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Apple Clashes With Sony Over iPhone 5 Music-Streaming Royalties (Report)

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Negotiations between the tech company and the music publisher fizzled when the latter pushed for a higher rate for song rights.

Apple has hit a setback in negotiations with Sony/ATV, the biggest music publisher in the world, for a song rights deal for a music-streaming service to launch on the iPhone 5.

The New York Post reports that the two companies clashed over music royalties, and Sony/ATV's push for a higher rate for per-song rights fees. As a result, music streaming on Apple's latest iPhone could be delayed for months.

In January, the publisher intends to back out of the copyright associations Ascap and BMI, the Post reports, citing sources, which means that music-streamers like Pandora could run into more difficulty negotiating rights deals.

STORY: Apple's New iPhone 5: Six Key Changes

A consortium led by Sony/ATV -- which is owned by Sony Corp. and the Michael Jackson estate -- purchased EMI Music Publishing for $2.2 billion in June, growing the publisher's arsenal to more than 2 million songs, factoring in EMI’s 1.3 million tunes. The deal included 251 compositions by The Beatles along with such classics as The Police’s "Roxanne," The Beach Boys' "Surfer Girl" and new songs by Justin Bieber, Usher and One Direction.

Sony/ATV head Martin Bandier's talks with Apple software exec Eddy Cue had gained momentum before they fizzled, and when news leaked of the discussions earlier this month, Pandora's shares dropped 22 percent over the course of two days, according to the Post.

Apple has been in discussions with music labels about forming a radio service that would promote new songs by artists in contrast to Pandora's algorithm model, the paper reports.