Will You Use iTunes Radio?

On September 18, Apple will launch iTunes Radio. The goal is to allow users to listen to and purchase streamed music. It will come out with the new iOS 7 software and include 200 other new features. Jim Urie, president of distribution for Universal Music, is recorded saying, “Everybody agrees it’s going to be good for the business.”

Competition

Apple innovated the digital music industry with its iTunes store. Released in January 9, 2001, it sells iPhone apps as well as music, movies, television shows, and university lectures. Insiders claim that iTunes radio is set to compete with other streaming services such as Pandora. To date, Pandora has over 150 million users with a valuation of over $2.6 billion.

Algorithms

iTunes radio will be similar to Pandora because it will suggest songs based on your musical preferences. In addition, Apple states the service will give you the ability to, “find a song you want, tap Buy — on a song that’s currently playing or one in your History or Wish List — and the track downloads instantly from iTunes.”

Currently, Pandora has an advertising-based free subscription offering, as well as a paid feature without the advertisements. It is unclear whether Apple will have a free and a paid service. However, it will pay higher royalties to artists than what Pandora currently provides. And, it may even have live DJ’s.

Announcements

Leading up to its debut, Apple conveyed the following descriptions:

” iTunes Radio: Hear where your music takes you. iTunes Radio is free streaming radio with the best selection of music. It builds and brings together stations you’ll love from day one. And the more you listen, the more personalized your stations become. It’s radio re-imagined.”

“The music you love. And the music you’re going to love.”

“Check out iTunes Radio on your iPhone, iPad, iPod touch, Mac, PC, or Apple TV. You’ll have access to more than 300 DJ-curated and genre-focused stations — including everything from Hard Rock to Doo Wop, all with crystal-clear sound quality. Your stations evolve based on the music you play and download. So the more you use iTunes Radio and iTunes, the more iTunes Radio knows what you like to listen to — and the more it can play music you’ll love.”

Accessibility

iTunes Radio is only available in the United States, with Western Europe to follow. Advertising is key to its success, and Apple has been in talks with McDonald’s, Nissan, Pepsi, and Procter & Gamble.

You can launch the streaming service through the “Radio” tab on the iTunes mobile app and through Apple TV. Apple’s iOS 7 will have categories such as: Radio, Genius, Playlists, Artists and More.

Good for Apple?

The streaming music genre is a billion dollar industry. It seems a natural progression for Apple to make. Many analysts think Apple peaked in 2011 with a mobile device market share of 24 percent. Today, it’s mobile device market share has declined to 14 percent, losing mainly to Samsung Android devices. And, it recently launched its lower cost iPhone 5C to compete in emerging markets, but it retails for between $99 and $199. Even with the price reduction, the iPhone 5C is still considered expensive in India and China.

Ovum analyst Tony Cripps states, “Anyone expecting Apple to come truly down market with the iPhone 5C was fooling themselves.” So, getting a piece of the streaming music market pie may or may not be Apple’s saving grace.

By