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.
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