Report: Apple overhauling iAd business in tandem with iRadio rollout

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Apple (NASDAQ:AAPL) is revamping its iAd mobile advertising business, shifting the unit's focus away from campaigns integrated into iOS applications to messages supporting the forthcoming iRadio streaming music service, Bloomberg reports.

Citing sources familiar with the changes, Bloomberg reveals Apple has charged iAd engineers and sales staff with overhauling the platform to integrate with iRadio, which is expected to offer free, ad-supported digital music services akin to rival efforts like Pandora Radio. While iAd staffers will continue to sell advertisements carried inside mobile apps, Apple is currently ramping up negotiations with advertising agencies including Omnicom Group's OMD to secure brand partners to run iRadio campaigns coinciding with the service's commercial launch, expected later this year in tandem with the rollout of the iOS 7 mobile operating system.

Apple reportedly is offering record label and music publishing partners three tranches of iRadio 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. iRadio also is expected to offer consumers the opportunity to purchase tracks via Apple's iTunes, the music business' largest source of digital revenues with an estimated $4.3 billion in download sales in 2012. One former iAd member told Bloomberg the unit has long lobbied for tighter integration with iTunes, allowing the group to sell ads to entertainment companies with the promise of connecting campaigns directly back to iTunes sales.

Spearheading the iAd revamp are Apple Senior Vice President of Internet Software and Services Eddy Cue, who oversees iTunes and the App Store, and Vice President Todd Teresi, hired from Adobe Systems in early 2012 to lead the iAd division. Apple launched iAd soon after purchasing mobile ad network Quattro Wireless in early 2010 for $275 million, but the service has struggled to compete with rivals like Google (NASDAQ:GOOG), in large part because Apple charged more than other ad platforms, restricted advertiser control over campaigns and limited all ads to apps optimized for iOS-powered devices.

An Apple spokesperson declined to comment.

Apple could announce iRadio during its annual Worldwide Developers Conference, kicking off June 10. Insiders say the company has completed licensing agreements with Universal Music Group, Warner Music and publisher Warner/Chappell, although negotiations with Sony Music Entertainment and its Sony/ATV publishing arm have stalled, which could delay the service's launch.

The Wall Street Journal and The New York Times first reported on Apple's plans to enter the streaming radio segment last fall. The pressure to bring iRadio to market intensified last month with the launch of Google Play Music All Access, a streaming music service offering personalized recommendations, featured content and music tailored to users' collections and previous listening behavior. Last week, Google said it would extend the service to iOS in the near future.

For more:
- read this Bloomberg article

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