Report: Apple launching streaming radio service in early 2013

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Apple (NASDAQ:AAPL) will launch an ad-supported streaming radio service optimized for iOS devices within the first three months of 2013, Bloomberg reports.

Citing sources close to the matter, Bloomberg said Apple is in talks with record label partners and a deal is expected by mid-November. Insiders state the labels are demanding an upfront licensing fee as well as a percentage of ad revenues and tools for integrating commercials spotlighting their recording artists. Sources said Apple views the streaming initiative as a way to grow its iAd mobile advertising platform, and also plans to integrate the service with its iTunes digital music storefront to fuel download sales.

Insiders state that Apple is also negotiating agreements that offer consumers expanded control over their listening experience--streaming service Pandora, for example, relies on a compulsory license that limits how often subscribers can skip tracks or how many times per hour they can listen to an artist. Apple is additionally demanding earlier access to upcoming releases.

The Wall Street Journal and The New York Times first reported on the Apple streaming service last month, stating the computing giant is mulling a multi-platform effort that would program content based on users' favorite artists, songs and genres. Sources have said the service would likely take the form of a preinstalled application integrated into Apple devices like the iPhone and iPad--Bloomberg adds that Apple will not focus on delivering music via the Web, calling into question earlier reports indicating the service would also extend to its Mac desktop platform and possibly to PCs running Microsoft's (NASDAQ:MSFT) Windows operating system. One source told The Wall Street Journal the Apple service will not support devices running Google's (NASDAQ:GOOG) Android mobile operating system.

"Radio is a natural step for Apple," BTIG Analyst Rich Greenfield told Bloomberg. "This helps Apple dominate in cars, where people listen to an average of two hours of radio a day… If Apple offers a radio product, it will be far superior to anything else on the market."

Apple declined to comment. "We don't comment on our stock price or rumored competitive moves," a Pandora spokesperson said.

iTunes has dominated digital media download sales for close to a decade, with more than 400 million accounts worldwide, but the streaming music segment is growing: This summer, Pandora reported 54.9 million active listeners, a 48 percent hike over the last 12 months, while rival Spotify touts more than 20 million active users, including 5 million premium subscribers. But Pandora also reported fiscal second-quarter 2013 losses of $5.4 million, tripling from $1.8 million a year ago as content acquisition costs continued to increase. Analysts estimate the Internet radio business as a whole currently generates less than $1 billion a year in revenue.

For more:
-read this Bloomberg article

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