Details of Apple’s entry into the Internet radio space appeared last week, and because it’s Apple, they got lots of attention. Apple has been interested in the space for a while, so this does not come as a big surprise. As WSJ.com puts it – Apple pioneered the online music business with iTunes, and drove it with hardware sales. Now that streaming services have begun to cut into song download sales, it’s time for iTunes to step it up.
Reportedly, Apple is in private talks with the record labels to negotiate royalty deals. Everyone knows that the performance royalty issues related to streaming are prohibitively expensive – content acquisition is the pricey challenge in the space. Indeed, Pandora shells out 50 – 60% of its revenue to labels and artists. The question is, does Apple have the kind of clout with the labels that can leverage an improved royalty landscape? And if so, is it possible this would benefit the streaming marketplace overall?
As far as what the service will be – it does sound a lot like Pandora. The NY Times says “Apple’s service would probably take the form of a preinstalled app on devices like iPhones and iPads and might be able to connect to users’ iTunes accounts to judge their tastes.”
First responders to the news about a streaming service from Apple proclaimed doom and gloom for Pandora. And the truth is, Pandora is so big and so reliant on Apple at this point that they probably will lose listeners if Apple opens up a service of their own. But that doesn’t mean it would be the worst thing for the streaming marketplace. In fact, given Apple’s golden touch, the fact that they are looking so closely at streaming and radio in general these days, could bode well for the space…