Apple Following Spotify, Pandora Model With iRadio Ads: Report

Spotify can be free, so long as you’re willing to subject your eardrums to ads.

Apple is reportedly planning an “iRadio” streaming music service that will compete against Spotify, Pandora, and a similar offering from Google.

And in order to profit from such a service, Apple may end up plastering it with “audio and banner ads” sold through the iAd network, according to unnamed sources speaking to Reuters.

If that report proves accurate, then Apple and Google will have effectively switched places, at least with regard to this one offering. Google, usually the company to aggressively push online advertising in exchange for free use of its products, instead charges a flat monthly fee for access to its own streaming music hub; meanwhile, Apple—which normally draws revenue from having customers pay for content—will be offering music for “free” so long as users sit through the various ads.

Apple has scored a deal to license content from Sony Music, according to AllThingsD, on the heels of a (reported) similar agreement with Warner Music Group. If those reports are accurate, Apple has enough pieces in place to launch (or at least announce) its streaming music service at next week’s Worldwide Developers Conference (WWDC) in San Francisco.

While Apple has gained much fame and fortune from selling digital downloads via its iTunes hub, steaming services have begun to eclipse downloads in popularity. Earlier this year, Digital Music News drew data from Nielsen Soundscan and public company disclosures and found that streaming services such as Spotify and Pandora were outpacing paid downloads by healthy margins. The cost may have something to do with streaming’s popularity: For example, Spotify offers music for free, so long as users are willing to listen to periodic ads (an ad-free version is available for a monthly fee).

The rise of Pandora and similar efforts has led to significant concern on the part of music labels and artists, both of whom risk earning only fractions of a penny per streaming play. That may have held up negotiations with Apple somewhat, as those labels fought for better terms; but with such issues apparently resolved, there may be little to stop Apple from entering the crowded field.


Image: Spotify