Apple Inc. (NASDAQ:AAPL) is reportedly in the midst of striking deals with numerous well-known music labels for starting an advertising-supported Internet radio service by early next year. The revenue distribution is being discussed thoroughly. This move on Apple’s part could be for the reason that music downloads are slowing down and users’ interests need to be retained so that they continue to purchase music online.
Till date, Pandora Media Inc (NYSE:P) was the undisputed leader in online radio, but Apple is applying for licensing pacts with labels, where users will get to select from a wider range of music, unlike Pandora, which has restrictions on how often users can skip tracks and how many times an hour an artist can be played. Apple wants to present the concept of playlists in a different way by allowing users to purchase a track as a music stream.
London-based International Federation of the Phonographic Industry reported that online music sales went up 8% in 2011 and 6% in 2010, while it grew between 12%-200% in the last few years. Apple wants to promote its iAd mobile advertising platform and also look for solutions to blend iAd with iTunes so that customers don’t switch to other sources of music online.
Apple Chief Executive Officer Tim Cook is going all out by encouraging the mobile advertising group to rope in new businesses and incorporate Apple’s services with ads. The amount of data being shared with the advertisers and the charges paid by advertisers is being reviewed as well, because Apple has to compete with Google this time.
Shares of Pandora Media slumped 11.73% to $8.20 in Thursday’s session and made a new low of $7.32. However, the stock has recovered 3% in the pre-open session.
Also, Sirius XM Radio Inc(NASDAQ:SIRI)’s shares fell 1.50% to $2.85 after hitting session low of $2.80.