Apple’s World Wide Developers Conference (WWCD) kicks off next Monday in San Francisco, and many observers are expecting to see the release of a streaming radio app alongside purported Mac OS and iOS updates.
Just last month, Apple struck a major licensing deal with Universal Music Group – the world’s largest record label. Apple followed this up by signing a second huge contract with Warner Music Group on Sunday. The Cupertino, California-based company is also in talks with Sony Music Entertainment, but it isn’t clear if they will come to fruition before the WWDC begins.
News of Apple’s victories sent streaming radio service provider and would-be-rival Pandora’s stock tumbling. The company’s share price was down more than 10 percent as of closing on Monday.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
While Apple may be arriving late to streaming radio compared to the usual suspects – Pandora, Spotify, Rhapsody, Slacker, and GrooveShark – the firm already has the support of 500 million users. Those comfortable with the iOS experience will likely find it easy to jump ship, and people who have previously been uninterested in streaming radio could be swayed by Apple’s effective marketing and “cool kid” appeal.
The upcoming iRadio will most likely be a free service, like Pandora, that is supported by ads. According to the recent Warner Music deal, Apple will pay 10 percent of advertising revenue to Warner Publishing – more than double the amount that Pandora currently pays.
Apple will also follow the Pandora standard of creating “radio stations” based on artists similar to those a user searches for. If the listener hears a song they like, they can seamlessly purchase it from the iTunes store. Additionally, Apple may allow users to skip or replay an unlimited number of songs. Pandora allows only 12 skips per day and doesn’t offer any replay options.
Apple is also in the midst of reworking its internal advertising arm, iAd, in preparation for the streaming radio release. This suggests that Apple is keen to capture a larger chunk of the $4 billion domestic mobile advertising market.
As compact discs begin their cassette tape-like descent into antiquity – down 13 percent last year – even digital downloads are losing momentum to streaming music services. Although digital sales were up 5 percent in 2012, streaming music services exploded with a 59 percent jump and $571 million in sales.
Perhaps the biggest irony of iRadio’s expected announcement is that many have dubbed it a “Pandora killer”, when Apple was a direct influence on Pandora’s mainstream success.
In a 2010 interview with Rick Newman, Pandora founder Tim Westergren said that “The iPhone changed everything for us. It almost doubled our growth rate overnight. More importantly, it changed the way people think of Pandora, from a computer service to a mobile service.”
The Apple WWDC kicks off at 7:00 am PST on Monday, June 10.