Apple has gotten the attention of radio broadcasters since reports — broken by the Wall Street Journal on Thursday night — indicated that the company is looking into building “a custom radio service similar to the popular one operated by Pandora Media.”
Though putatively aimed at online music services, an Apple push into the field could increase pressure on broadcast radio outlets already getting plenty from online music streamers.
While online services like Spotify and Clear Channel’s iHeartRadio compete with Pandora, the WSJ speculated that “Apple’s outsize presence in online music sales and massive installed base of MP3 players, smartphones, tablets and computers could make it a much more serious threat to Pandora than any of its current would-be rivals.”
Through midday Friday, Pandora’s market share price sank 18 percent, according to multiple reports.
The WSJ added another bit of gloom for established services; purportedly Apple is looking to engage in direct talks with record labels, which could give the company a major advantage over Pandora, which does not negotiate with record labels but instead pays “sky-high royalty costs … based on rates set by an arm of the federal government.”
The New York Times wrote that Apple is interested in direct licenses because it “would give the company more flexibility in using music.” This would alleviate the standard royalty questions that have dogged Pandora and others, wherein a significant portion of revenues is devoted to royalties. It would also avoid restrictions placed on most online radio services that limit the number of times a particular artist can be played per hour.
Hot off its copyright win over Samsung, Apple is poised to reveal a new iPhone next week, Sept. 12. However, about this particular pursuit, the company has thus far declined comment to both the NYT and WSJ. In fact, the NYT reported their story using sources who asked not to be named.
