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Apple will soon be joining the ranks of Pandora, Spotify, Rhapsody and Deezer. The Cupertino-based tech giant will be launching iRadio, a new music streaming service. Apple’s enormous size may allow them to offer a service that transcends existing Internet radio.
While iRadio is still a few months off, there is much speculation as to the features it will offer. There are 500 million iTunes users. It is likely that iRadio will play music based on your iTunes collection. Picking individual tracks for playback may be an option, however, it could cannibalize Apple’s iTunes revenues. Apple may provide this feature in order to match Spotify.
iRadio will be free. The service will be subsidized with advertising — both audio and visual. Users will also be able to purchase currently playing songs on iTunes with one click.
It is rumored that iRadio will allow users to rewind a song during playback. This is nothing new. TuneIn Radio already offers this functionality, however, it only plays existing Internet radio streams.
Audio quality may differentiate Apple from its competitors. Pandora offers a 64kbps stream over the web and 192kbps for premium subscribers. Spotify offers 160kbps for free, with a high quality 320kbps for premium members. Since Apple already has iTunes content encoded at 256kbps, if they offered this quality for free, it would be unprecedented. Unfortunately, many users don’t really care about audio quality. Most people can’t tell the difference or don’t have a high fidelity audio system. The true audiophile will play vinyl on a turntable.
iRadio is expected to be available on iOS — the operating system for the iPhone, iPad and iPod Touch. I also expect it to be available on Apple TV (which runs the core iOS operating system) as well as iTunes for Mac and Windows.
Apple recently struck a deal with Universal Music Group, the world’s largest record label. Negotiations are continuing with Warner and Sony. Apple has deep pockets, so the major labels aren’t going to let them get away with the same deal they brokered with Pandora.
Pandora pays royalties of 12.5 cents per 100 tracks. Apple first tried to negotiate for about half of Pandora’s royalties. After all, assuming an economy of scales effect, Apple will be able to play more tracks than Pandora. The labels didn’t go for this. It’s unclear whether they accepted 12.5 cents. It’s apparent that the labels want Apple to pay more because they have more money.