Apple's iRadio almost a reality?

Apple is rumored to be signing with Universal Music Group next week to license music

Technology trends and news by Faith Merino
April 12, 2013
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Gird your loins, Pandora. Apple’s iRadio may be inching closer to becoming a reality, according to rumors that the tech giant is expected to sign its first licensing agreement with Universal Music Group as early as next week. Along with Universal Music Group, Warner Music is also expected to sign with Apple, according to sources who spoke to The Verge.

Apple’s unofficially dubbed iRadio is expected to be similar to Pandora, with some slight differences, such as more on-demand features, which could make it competitive with not just Pandora, but Spotify and Rdio as well. 

ITunes has been the top digital music store in the U.S. since 2008, with 25 billion songs purchased to date. But a streaming service would likely introduce listeners to new music, which would push more sales. And it’s possible that with flagging sales of iPhones and iPads, Apple is looking to beef up its content business.

Universal Music Group is the largest of the major record labels, accounting for 34% of all physical album sales and 31% of all digital album sales in 2012. Sony Music Entertainment, the second largest label, accounted for 32% of all physical album sales and 27% of digital album sales in 2012.

But talks with Sony haven’t progressed as far as those with Universal and Warner, according to The Verge.

Word of Apple’s new streaming music service first surfaced last September and is expected to debut later this year. The news came as a surprise to analysts, who didn’t see Apple jumping into a business that involves paying back a substantial portion of revenues to record labels in the form of royalties. There was some hint that Apple would be paying roughly half of what Pandora is currently paying to license music, but now it seems Apple will be paying more or less the same amount.

The news comes days after Pandora announced they’ve reached 200 million registered users. It took the company six years to reach 100 million users in 2011, and that number has doubled just two years later. The average Pandora user listens to 20 hours of streaming music each month. Mobile has played a huge role in Pandora’s growth as smartphone penetration now accounts for more than half of the mobile phone market. No doubt, Apple did the math and saw that they’ve already knocked down the mobile issue, so from there, it’s a clear shot to streaming music domination.

Pandora shares were down 1.73% to $13.63 as of this writing.

Apple has not responded to inquiries from VatorNews. 


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