Apple Plans a Move Into Streaming Music

In a move that could shake up the growing field of Internet radio, Apple plans to develop a service that would compete with Pandora Media and similar services by sending streams of music customized to users’ tastes, report Ben Sisario and Nick Wingfield on Friday in The New York Times.
Apple, which has already dominated the field of digital music with its iTunes store, is in the early stages of negotiating with the major record labels for the service, and the full scope of its plans were not clear, according to these people, who asked not to be identified because the negotiations were private.
Apple’s service is likely to take the form of a preinstalled app on Apple’s devices like iPhones and iPads and might be able to connect to users’ iTunes account to judge their tastes.

Most services that offer customized streams of music operate under limited licenses that restrict what they can do with the music, for example, limiting the number of times songs by particular artists can be played in an hour. But Apple is seeking direct licenses with record labels that would give the company more flexibility in using music, according to the people briefed on its plans.
Like Pandora, Apple’s radio service would have advertising, carried through Apple’s own platform. Whether Apple would then share part of the ad revenue with labels or pay them some other licensing fee was unclear. It was also unclear whether Apple’s service would be free or be a subscription service.
The move by Apple perplexed some analysts, who noted that the Internet radio business seemed too small — accounting for less than $1 billion a year in revenue, by some estimates — for Apple to bother with. Still, Apple’s clout in music through iTunes could come to seem antiquated. As Megan Guess wrote on Ars Technica, “Apple’s bid for a radio-streaming service might be a defensive measure against the growing popularity of Pandora and Spotify.” But it might not, she said, “be a guaranteed money maker for the company” because Pandora has yet to report a profit.