Apple is rumored to be launching a new online service providing unlimited streaming.
Watch out Pandora, Apple is reported to be in talks to create a new internet radio station.
The Californian tech giant is said to be making its own foray into the music streaming market and is set to directly rival the likes of Pandora, who are one of the existing US services that provide similar features.
The scheme is still in the planning stages, with Apple apparently holding talks with record companies to negotiate royalties and contracts. The full details of the plan aren’t clear yet, as the negotiations are shrouded in secrecy, however it seems that this latest venture is a hat tip to the success of current streaming services like Pandora, Last.FM and Spotify.
Speaking to the Telegraph newspaper in the UK, technology analyst Adrian Drury speculated that Apple are trying to expand into a market where they currently have little to no influence:
“It is an acknowledgement by Apple of the success of the ad-funded web radio model and the impact that is having on the download-to-own market,” he said. “This would control the market and steal away some of the thunder that is being sucked up by Spotify and Pandora.”
According to insider reports, Apple plans to rival existing streaming services by offering unlimited streaming. Currently, Spotify and Pandora users can only listen to tracks a limited amount of time before they either have to pay a monthly subscription for unlimited listening, or purchase and download individual tracks.
So how will Apple manage to stream unlimited music for free?
Apple hopes to overcome the payment barrier and offer users unlimited listening by including advertising through its iAd platform, which syndicates ads to iPhone and iPad apps.
Streaming companies have two routes to take when arranging royalty payments: paying royalty rates set by the government, or negotiating separate licenses with individual record companies.
Pandora currently uses royalty rates set by an arm of the federal government – and it costs them. In fact, the royalty costs associated with online radio are so high that both Pandora and Spotify have never reported a profit, and despite having millions of users, both companies currently operate at a loss.
According to the Wall Street Journal, Apple are using a different tactic and approaching major record companies separately to negotiate individual licensing costs with them.
Insiders, who are familiar with the talks, say that the negotiations are currently still in very early stages, so it is likely to be several months before the service becomes available. Apple have considered venturing into the online streaming market before, however abandoned those plans and instead focused on services like iTunes Genius, which recommends tracks to purchase based on users’ music tastes.
Apple have been the biggest player in the digital download market since the launch of iTunes in 2003, and the service now has a reported 400 million users. A recent consumer survey by Nielsen Co. revealed that more adults use Pandora to listen to music than iTunes, so if Apple successfully launch an online streaming service, they’ll officially dominate the online music market across the board.