Apple mulls licensing radio streaming service, report says

IDG News Service - Apple is considering licensing a custom radio streaming service similar to Pandora, according to a report in the Wall Street Journal.

The company recently started negotiations with record labels for such a service, which would still take months to launch, wrote the paper, citing people familiar with the idea.

Streaming music services have been marked by failure due to difficulties in securing deals with record labels, high licensing costs and onerous restrictions on how content can be played or stored.

Apple officials could not be immediately reached late Thursday. The company has an event scheduled for Sept. 12 in San Francisco, where it is widely believed it will launch a new iPhone.

Charles King, principal analyst with Pund-IT, said Apple is entering the market very late and is unlikely to deliver something unique from other services. Plus, developing a streaming service is costly and complex with a relatively meager potential for profit.

"If the goal is to enter and dominate the streaming music market, buying its way in by purchasing an established player seems like a more sensible course of action," King said.

Both Pandora and Spotify offer a more dynamic alternative to Apple's iTunes Store, which does not offer a streaming service and instead sells songs on an a la carte basis or entire albums.

Pandora, launched in 2000, lets users create up to 100 custom radio "stations" composed of music that is similar to an initial song selected by a user. Pandora does this by analyzing some 450 different characteristics of songs, which it calls the Music Genome Project.

The free service is subsidized by advertising. Users can pay $3.99 a month or $36 a year for ad-free listening. On Aug. 6, Pandora said it had 54.6 million active listeners as of the end of July, up 48 percent over a year before.

Spotify of Sweden, launched in 2008, is also a major player, but it's approach is different: It has secured licensing deals with record labels that allow users to listen to full albums. Spotify claims it has 10 million active users with 3 million paying subscribers.

It offers an ad-subsidized free service and two premium services, the more expensive of which allows users to download songs for offline listening on mobile devices.

The company's "unlimited" service, which features no ads, unlimited steaming and a radio service, costs $4.99 a month, with the premium offline mobile service costing $9.99 per month. Spotify's catalog is about 18 million songs, but the figures varies by country due to licensing restrictions.