Apple Is Said to Be Pressing for Internet Radio Deals
After months of stalled negotiations over its planned Internet radio service, Apple is pushing to complete licensing deals with music companies so it can reveal the service as early as next week, according to people briefed on the talks.
Context & Ripple Effects
Apple's radio ambitions have been public since September 2012, when it was first reported to be building a Pandora rival, but negotiations with the labels dragged through the spring over money and mechanics — most visibly the cost of letting listeners skip songs. The Times reports Apple now wants those deals closed so it can show the service at its WWDC keynote as early as next week.
The story traveled unusually widely for a pre-launch rumor — pickups at CNET, the Wall Street Journal, Billboard and Gizmodo within a day — and CNET's version adds that Warner Music had already reached terms, making a WWDC reveal look like a matter of finishing the remaining majors.
First-order effects
- Apple gains the licensed catalog needed to launch a Pandora-style service against an incumbent that has spent years accumulating listener data and ad relationships.
- Music labels gain a second large-scale buyer for streaming-radio rights, ending their single-buyer dependence on Pandora and giving them leverage to renegotiate terms across the category.
Second-order effects
- Pandora faces direct competition from a service bundled into hundreds of millions of iPhones, iPads and Macs — distribution it cannot match without paying for placement.
- The sticking points already reported, like skip limits and per-song economics, become the template other entrants must accept, since Apple's scale lets it dictate licensing structure rather than inherit it.
Third-order effects
- If Apple ships radio inside its OS, internet radio shifts from standalone services competing on curation to features attached to device platforms — pressuring pure-play streamers' advertising economics and pushing labels toward platform-level licensing deals.
- An ad-supported Apple service would also put Apple into the audio-advertising business alongside Google and Pandora, widening the fight beyond hardware margins.
The trend: Internet radio is consolidating from independent apps into bundled features of device platforms, with record-label licensing terms set by whoever owns the largest installed base.