Apple launches would-be Pandora killer iTunes Radio

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Apple (NASDAQ:AAPL) introduced its new iTunes Radio streaming music service during its annual Worldwide Developers Conference in San Francisco, promising consumers a series of content personalization, discovery and sharing options available across its connected device portfolio.

Initially rolling out in conjunction with the new iOS 7's overhauled Music app, iTunes Radio--which in terms of concept and scope mostly recalls streaming radio service Pandora--enables listeners to access more than 200 Apple-curated featured stations or to create their own stations based on favorite artists and songs. Users may also share stations with friends. Any song played through iTunes Radio may be purchased with one click from Apple's iTunes digital storefront, the music business' largest source of digital revenues with an estimated $4.3 billion in download sales in 2012.

Apple will support iTunes Radio across the iOS platform as well as Apple TV and Mac. The service is available free, and it includes both audio and text ads. Subscribers to Apple's iTunes Match--which scans music library files and matches each selection with 256 kbps versions culled from the iTunes Store catalog and stored via the iCloud platform--may access an ad-free version of iTunes Radio: iTunes Match is priced at $24.99 per year.

The official iTunes Radio launch follows just days after Apple reportedly completed a streaming music licensing agreement with Sony Music Entertainment: The other two major labels, Universal Music Group and Warner Music, signed on within the past several weeks. The New York Times recently reported that Apple ramped up negotiations in the last few weeks in an effort to wrap up all iTunes Radio licensing deals ahead of WWDC 2013.

Insiders say Apple is offering record label and music publishing partners three tranches of iTunes Radio revenue: Royalties per track streamed, a share of advertising proceeds and a guaranteed minimum sum over the course of the contract in the event the number of plays or advertising sales disappoint. Bloomberg reports that in tandem with iTunes Radio's rollout, Apple is revamping its iAd mobile advertising business, shifting the unit's focus away from campaigns integrated into iOS applications to audio messages optimized for the streaming radio platform. iAd staffers will still continue to sell advertisements carried inside mobile apps as well.

The Wall Street Journal and The New York Times first reported on Apple's plans to enter the streaming radio segment last fall. In addition to dedicated digital music services like Pandora and Spotify, Apple also faces competition from the new Google (NASDAQ:GOOG) Play Music All Access, a streaming music service offering personalized recommendations, featured content and music tailored to users' collections and previous listening behavior. Google recently said it would extend the service from its Android platform to iOS in the near future.

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