Apple Reportedly Creating Music Service to Rival Pandora and Spotify
By Karla Robinson
September 10, 2012
September 10, 2012
- A recent Nielsen consumer survey found more adults reported using radio streaming service Pandora to listen to music than Apple’s iTunes.
- “Apple has dominated the sale of song downloads since 2003 when it launched what was then the iTunes Music Store. It has since become the largest music retailer, physical or digital, in the world,” reports the Wall Street Journal. “But if services like Pandora and Spotify gain popularity, Apple could lose its edge.”
- Apple is reportedly working on creating a custom-radio service, according to people familiar with the matter. The service would be available across all Apple products and possibly on Windows computers. It would not, however, work with devices using Google’s Android operating system.
- “Apple is negotiating for its own licensing deals with record companies, these people said, because it wants to offer users a greater degree of interactivity than allowed by so-called compulsory licenses used by Pandora and other webcasters,” notes WSJ.
- Pandora’s free, ad-supported service has yet to be profitable due to high royalty payments. Research firm eMarketer expects the company to earn $226.4 million in mobile ad revenue this year, but Pandora’s “content-acquisition costs for [Q2] increased 79 percent compared with the same quarter in 2011, far outstripping its revenue growth of 51 percent,” explains the article.
- Apple’s service would also take the ad-supported approach with its iAd platform, a move that could make achieving profitability difficult. Competing music service Spotify instead relies on subscription fees for ad-free versions, and has noted that less than 15 percent of its revenue comes from ad sales.
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