Friday, October 26, 2012 - 1:35pm
Two noted technology writers today consider the likelihood of Apple launching an Internet radio service, and challenge the notion that it would mean death to competitors like Pandora.
Peter Kafka writes for All Things D, the tech blog of The Wall Street Journal. He suggests that because Apple can create great devices doesn't mean it'll be a slam-dunk for it to own the ad-supported Internet radio space.
"Selling Internet ads turns out to be a difficult, labor-intensive process — maybe even more so for Internet radio ads, which require lots of face time with local buyers," Kafka reminds us. "Pandora has been plodding away at this for years, with some success. But it seems hard to imagine Apple spending the same kind of effort."
Bloomberg's sources report that record labels want a cut of that ad revenue, and even some of the ad inventory itself to promote their artists (read more in our original coverage here). But Greg Sandoval at CNet spoke with other unnamed sources that say the labels aren't yet satisfied with what Apple's offering, which makes an Apple "iRadio" launch (that's the shorthand we've been seeing) anything but a done deal.
"Some decision makers at the big record companies want Apple to sweeten the offer," as Sandoval paraphrases the "music executives" with whom he spoke. "CNET's sources say that some of the sector's leaders don't believe the cut Apple put on the table is big enough."
Part of the problem may be that Apple expects not only relaxed restrictions on how it can use the music (see "sound performance complement" note in our Bloomberg coverage here), but also wants a discount on royalties.
"Sources said Apple has offered to pay a lower royalty rate than Pandora pays even though it wants to provide iTunes users with the ability to do more with the music than Pandora's customers enjoy," wrote Sandoval.
And even if Apple were to launch its own streaming radio, Kafka thinks keeping it within the Apple-verse leaves ample listening opportunities on other platforms for Pandora.
"It’s unlikely that (Apple's) going to make that one available for Android users. Which means Pandora will still have plenty of room to play."
Read Kafka in All Things D here and Sandoval in CNet here.
An interesting footnote: Regarding yesterday's news of the official launch of the Internet Radio Fairness Coalition to support the Internet Radio Fairness Act, Sandoval in CNet says "CNET has learned that the top record companies plan to quietly gather next week to discuss their strategy for fighting the legislation. In addition to the representatives from the top three labels, invitations were sent this week to some of the music industry's top music managers."