Apple’s efforts to create an Internet radio service to compete with Pandora has been delayed by licensing negotiations with the major labels. Apple had hoped to introduce the service early this year, but now it is not likely to reach the market until the summer, if not later, according to a NY Times story.
Apple has never announced the service — dubbed “iRadio” by analysts–but according to music execs, Apple wants to preload an app on its mobile devices that can deliver a free music discovery stream of songs tailored to each user’s taste (like Pandora) and supported through its iAds ad platform.
Such an app would have a vast potential audience. It would also pose a threat to Pandora, which dominates the Internet radio field with more than 65 million regular users and, according to Apple’s charts, is its second-most popular free app of all time (No. 1 is Facebook).
Apple had once hoped to introduce the radio service around the Grammy Awards in February. But it has been delayed, chiefly by slow progress in licensing negotiations with record companies and with one key publisher, Sony/ATV, which also controls the EMI publishing catalog.
Apple can get publishing licenses for most songs through the major performing rights organizations, including ASCAP and BMI. But this year, Sony/ATV withdrew the relevant digital rights from those groups, forcing digital services to negotiate directly. Earlier this year, Sony negotiated a 25% increase in its publishing royalties from Pandora.
When crumbs of iRadio news have appeared, it has tended to depress Pandora’s share price, at least temporarily. But its delay gives Pandora at least a few more months without that competition. (It still faces competition from the iHeartRadio app of Clear Channel Communications, as well as other services like Spotify, Slacker and Songza.)
RBR-TVBR observation: Talk about a great pitch to advertisers. Right off the bat, everyone with an Apple ID, iTunes account or iPhone would be instantly served up the new service. The massive audience is already there. iRadio, if that’s what it will end up being called, will also likely offer the ability to mix in favorite songs that users already have downloaded from iTunes—giving it a bit of an advantage over Pandora, which serves up songs based on other songs the user has liked or chosen initially.