Apple's Pandora Killer Launches Q1 2013

It has long since been rumored that Apple will release their own streaming music service.  In 2009 Apple acquired Lala which fueled speculation, and not only fueled it but damn near wrote the writing on the wall.  Throw on top of that, Apples sudo streaming service within iCloud and you can rest easy as the Apple Streaming music bet is a pretty solid one to make.  The question has long been when?

This is a logical step for Apple to take iTunes and their iTunes services not only because of their recent ecosystem push of iCloud, but also because music downloads having been slowing in recent years.  It is an opportune time for Apple to get into this very competitive space, at the very least, just to maintain a competitor in the online space.  Just last week, Microsoft rerolled their Zune Music store, it is now Xbox music which includes the streaming of millions of songs for free.



The big thing that Apple is dealing with is the licensing model.  Unlike Pandora which works off of a compulsory model preventing too many skips and an artist only being allowed to play so many times in an hour, Apple is working with music executives to discuss Apple's music radio plans and to develop a different model.

Bloomberg writes:

"Executives from Vivendi SA (VIV)’s Universal Music Group, Warner Music Group Corp., and Sony Corp. (6758)’s music division visited Apple’s headquarters in Cupertino, California, in recent weeks to learn more about its radio plans, the people said. Apple, the world’s biggest music retailer with more than 400 million iTunes accounts, wants listeners to be able to buy tracks as music streams or revisit what they’ve heard in auto-generated playlists, they said."

On September 7, 2012, negotiations with the record companies and Apple revolved around advertising.  The record companies want a pretty large stake of the ad revenues wanting not only an upfront fee, but also a percentage of the ad sales.  They also want the ability to implaint their own advertisements to push their artist.  Apple in turn sees this as a way of growing their iAd platform with the implementation of iAds in iTunes.

The record companies are never ones to give up on a fight, especially with Apple.  Ultimately though they do end up making compromises, ones that are generally in favor of Apple.

 

Source:Bloomberg