Report: Apple's iTunes Radio to serve ads every 15 minutes

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Apple (NASDAQ:AAPL) will launch its iTunes Radio in September and a handful of blue-chip brand partners are lining up to support the new streaming music service, Advertising Age reports.

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Apple promises iTunes Radio will launch this fall.

Citing sources familiar with the negotiations, the report states Apple has completed iTunes Radio sponsorship agreements with Procter & Gamble, McDonalds, Pepsi and Nissan, with one or two other brands possibly joining the lineup as well. iTunes Radio will serve interstitial audio and video ads as well as interactive display ads that take over whichever iTunes-enabled device screen the consumer is using; Apple will serve audio ads every 15 minutes and video ads each hour, limiting video promotions to times when consumers are likely to be looking at their device screen--for example, hitting play or skipping tracks.

According to AdAge, Apple is charging inaugural iTunes Radio ad partners anywhere from the high single-digit millions to tens of millions of dollars, with options including 12-month campaign packages. At launch, each campaign will run across all device platforms supporting the music service, including the iPhone, iPad, desktops and Apple TV, and all advertisers are granted exclusivity within their respective industry vertical through the end of 2013.

When Apple expands its iTunes Radio ad efforts in early 2014, advertisers will be allowed to target their campaigns to specific hardware platforms: At the same time, the cost of ads will fluctuate in relation to the size of the device screen, with iPhone ads the cheapest and Apple TV ads the most expensive. Also in 2014, Apple will open ad sales to other brands, demanding a minimum buy-in of around $1 million. All iTunes Radio inventory will be sold via Apple's iAd mobile ad network.

Apple did not respond to requests for comment.

Apple previously announced that listeners wishing to sidestep advertising altogether may opt for an ad-free iTunes Radio package offered in conjunction with its iTunes Match service, 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. iTunes Match is priced at $24.99 per year.

Rolling out in tandem with the new iOS 7's overhauled Music app, iTunes Radio 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.

iTunes Radio will pay royalties to labels based on how many times listeners hear their songs and how much advertising Apple sells, The Wall Street Journal reported in June. During the first year the service is live, Apple will award label partners 0.13 cents each time a song is played, as well as 15 percent of net advertising revenue, proportionate to a given label's share of the music played on iTunes Radio. In year two, label payouts increase to 0.14 cents per listen and 19 percent of ad revenue. The Journal adds that many of the stipulations are more generous to labels than their current agreements with Pandora Media, widely considered iTunes Radio's most serious rival.

For more:
- read this Advertising Age article

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