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Music Forecasting Looks at iTunes Radio

Research firm says new service isn’t selling much music

When Apple iTunes Radio launched last fall, many in the tech media dubbed it “a Pandora killer.”

But that hasn’t happened.

In fact, the opposite has occurred, according to research firm Music Forecasting, author of “They’re Not Buying It: Why iTunes Radio Isn’t Selling Music.”

As Apple developed iTunes Radio and negotiated streaming rights music labels, “one of its critical selling points was the service’s potential to sell more music.” There is a price and buy button displayed as each song plays, notes Music Forecasting EVP Sam Milkman.

Noting that Apple doesn’t share data on how many direct sales iTunes Radio has generated, it doesn’t appear that digital sales have increased substantially during the initial roll out, according to Music Forecasting. But they also say to Apple’s credit, iTunes Radio has developed a sizable user base in its first three months in the streaming radio business, with 20 million active users (whereas it took Pandora eight years to cultivate 64 million).

The key is when consumers listen to streaming music, they want to relax and enjoy it, and not necessarily buy it right then. “They are not in the mood to stick their noses up to their iPhones, control every song or look for the Buy button,” notes the report.

The firm suggests that Apple create incentives for consumers to buy more music through iTunes Radio, like offering the sixth song free once you’ve bought five.

To be fair, notes the research firm, it’s early and the service will likely attract more users as time goes on.

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