Apple Inc. is planning to throw its hat into the radio music streaming game next week after it unveils its own music streaming service, known only as iRadio at the moment, at the annual World Wide Developer's Conference.
Sources tell Bloomberg iRadio will be free for subscribers and will thus be supported entirely by iAd, a service that looks at what kind of apps the person purchases and makes ad suggestions accordingly. Tim Cook is reportedly looking to shift the way Apple courts advertisers. The company has been working with Omnicom Group Inc. to negotiate advertising campaigns that would run exclusively on the new radio service.
This is a new area for Apple. Many who knew him say Apple founder Steve Jobs was not a fan of the idea of streaming. He firmly believed people wanted to own their music. However, with Apple Inc. losing ground to Google in advertising revenue, it has no choice but to try and get major brands to run campaigns on their service. It will be the only way that it can compete with the likes of Spotify and Pandora.
Apple is taking a bit of a risk by putting all of its profit eggs in iAds basket. The advertisement service hasn't done well since its beginning in 2010. It turns a lot of potential advertisers off because it doesn't give them as much control over where their adds will go. In addition, Apple has charged more than competitors in the past for advertisements. However, that was all before music streaming became wildly popular and it is likely the company will rethink iAds business model to adapt.
It's unclear whether or not iRadio will be similar to Pandora, offering users streaming of random songs based on their musical taste or if it will be more like Spotify, offering users a chance to stream songs on demand. Likely it wil be the former so as not to step on the current iTunes model of purchasing songs and albums through their store.
