The details come from "sources close to the situation" who spoke with the New York Post. They said that Sony/ATV, the world's largest music publisher, couldn't reach an agreement wih Apple on a per-song rights fee.
Such rights are usually a fraction of a cent per stream, but Sony/ATV was allegedly seeking a higher royalty rate from Apple.
But Apple is seeking more flexible licensing than the deals that the current dominant Internet radio service, Pandora, has inked with record labels. Apple's licenses would allow users to play a selected artist more times than Pandora, and would allow the company to point people to the iTunes Store to generate music sales.
"While Pandora serves up songs based on algorithms, Apple's talks with the labels involves an element of promotion based on what music labels are pushing in any one month, sources said," the Post reported.
Apple's apparent Internet radio plans were first reported earlier this month by The Wall Street Journal. It was revealed that Apple is looking to create a streaming radio service to rival current offerings like Pandora.
The new radio service from Apple is expected to focus on virtual stations to play music on a Web browser or through dedicated applications on iOS devices. Advertisements from Apple's iAd platform are expected to be incorporated into the service in exchange for free user access.