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Apple to take on Pandora with online radio service as early as next year

Apple’s rumoured online radio service (opens in new tab) has entered advanced stages of talks with major record labels, Bloomberg has reported (opens in new tab), citing “people with knowledge of the negotiations.” Accordingly, we can expect to see a Pandora-like streaming radio service from Apple next year, the publication has said.

The tech giant’s talks with music labels have reportedly focused on reaching an agreement on how to share revenue from what will be an ad-supported service. But the intensification of the negotiations suggests a deal could be on the horizon as early as mid-November, with the service possibly due for a launch in the first quarter of 2013.

Apple, which proved to be a boon for digital music with its iPod and iTunes, is working with record companies on new business models encouraging the discovery and purchase of digital music, as music download purchases show signs of slowing.

Apple is apparently working on creating a service that is app-based, not primarily run through a browser like existing competitors. The expected new model, which will challenge the likes of Pandora (opens in new tab) and Rdio (opens in new tab), will primarily focus on flexibility, allowing users to skirt strict rules about skipping tracks and hourly plays that result from restrictive licensing deals from record labels and music publishers.

“Radio is a natural step for Apple,” BTIG LLC analyst Rich Greenfield told Bloomberg. “This helps Apple dominate in cars, where people listen to an average of two hours of radio a day.”

Reports of Apple’s forthcoming entry in the music streaming market have sent Pandora’s shares into flux, dropping and rising several times over the past few months, but finally declining by 12 per cent this week.

“We don’t comment on our stock price or rumored competitive moves,” the company’s vice president of communications Eric Brown said in an emailed statement. “We remain focused on our listeners and delivering the best Internet radio experience for them.”