Report: Apple launching a radio service in early-2013

Just as we’re counting down until markets close and Apple reports its quarterly earnings, Bloomberg conveniently publishes a report about work on Apple’s own Internet radio service apparently slated for early next year. The iPhone maker reportedly has “intensified negotiations” with major record labels about launching an iAd-supported online radio service.

These talks currently focus on various advertising revenue sharing schemes, with the final deal possibly on the horizon by mid-November. In addition to an upfront fee, music companies reportedly demand a percentage of iAd sales and the ability to insert their own commercials for artists…

Bloomberg’s Olga Kharif and Andy Fixmer reported that top dogs from Universal, Warner, Vivendi and Sony recently visited Apple’s Cupertino headquarters to learn more about Apple’s plans.

Talks are centered in part around how to share ad revenue and a deal could be reached by mid-November, with Apple starting a service within the first three months of 2013, said the people, who asked not to be named because discussions are still in progress.

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.

Needles to say, shares of Pandora plunged a whopping 21 percent on the news.

To challenge Pandora, Apple is seeking licensing pacts with labels that allow more flexibility about what listeners hear. Pandora relies on a compulsory license that limits how often users can skip tracks and how many times an hour an artist can be played. Apple is also seeking earlier access to new releases.

But why launch a radio service in the first place?

With sales of music downloads slowing, Apple and record companies are seeking new ways for customers to discover and buy digital music.

iAd, you say?

The advertising initiative is part of broader flexibility Apple Chief Executive Officer Tim Cook is giving the company’s mobile advertising group to lure new business and integrate ads with other Apple services, according to people familiar with the matter.

The Wall Street Journal back in September similarly reported that Apple was working on a Pandora-like service.

Here’s a video by Bloomberg TV.


Now, it’s indicative such an eyebrow-raising story would come from a very respectable publication less than two hours ahead of Apple’s earnings release. Typically Bloomberg along with The Wall Street Journal and The New York Times act as Apple’s unofficial mouthpieces.

Apple’s public relations is known for planting rumors about unreleased products that “people familiar with the matter” then pass along to big media to help Apple set the news agenda. For example, when Google unveiled its Nexus tablet on June 28, The Wall Street Journal soon after reported that a smaller iPad was in the works.

So, what do you think of this Apple radio service?

As for me, nearly all of my music purchasing, discovery and listening is now on Spotify, a $10 a month streaming service.

Ever since I started using Spotify, I simply cannot justify buying individual tracks. The math is a simple one: a single album’s worth on iTunes buys me an unlimited access to millions upon millions of tracks on Spotify which beg to be streamed.

For the record: I happily pay for my iTunes Match subscription.