Apple has been branded 'cheap' by US record labels for offering to pay a royalty fee less than one sixth of rival Spotify for its upcoming music streaming service.

According to the New York Post, which broke the story, Apple tabled an offer of just 6 cents per 100 songs streamed. That led record industry executives to refuse the offer, saying Apple's offer is "seen as way too cheap".

Currently, Spotify – which dominates the market in the UK and Europe – pays around 35 cents per 100 songs streamed. That is largely down to the nature of Spotify's service, which lets users picks and choose the songs thats are played.

Industry expectations are that any service from Apple – rumoured to be called iRadio – is likely to be closer to the Spotify model, than that of internet radio services like Pandora and Rdio.

However, that hasn't stopped Apple from allegedly specifically demanding a rate lower than Pandora, which currently pays 12 cents per 100 songs streamed, according to one executive that spoke to the Post.

Music label insiders have said that Apple should be paying at least 21 cents per 100 songs. That is the rate set by the US Copyright Royalty Board specifically for companies that don't have a broadcast operation.