Apple reportedly negotiating with labels to stream with fewer restrictions on interactivity and content

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Issue Date: 
Sep 7 2012 - 1:05pm

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"In a move that could shake up the growing field of Internet radio," writes The New York Times, "Apple plans to develop a service that would compete with Pandora Media by sending streams of music customized to users’ tastes," news broke late yesterday.

The Wall Street Journal wrote, "Such services create virtual 'stations' that play music similar to a song or artist of the user's choosing, either on Web browsers or smartphone apps. Like traditional radio, they are typically free for users, but incorporate advertisements."

Interestingly, Apple is reportedly negotiating with major labels regarding the service. Webcasters wanting to operate a non-interactive service don't need label agreements to stream -- as long as they adhere to DMCA rules (and pay royalties at the established rates), there's a statutory license available to them.

The fact that Apple is looking to forge deals with the labels indicates (and some sources have confirmed) they want to operate on terms other than the statutory -- in regards to the rates they pay, or the level of user-interactivity (on-demand song play, offline play, downloading, etc.), or content presentation (the DMCA limits the amount of music by a single artist a webcaster can stream in a given time frame, for instance).

Sources say the Apple service would likely be free to the user, and ad-supported. The service would like come preinstalled as an app on devices like iPhones and iPads, and might be able to connect to users’ iTunes accounts to collect usage info and better understand their tastes (both huge competitive advantages for Apple over services like Pandora). The service, reportedly, will not work on the Google Android mobile platform.

"Going head-to-head with Pandora pits Apple against one of the only other companies to gain real consumer traction in online music," writes The Journal. "According to a recent consumer survey by Nielsen Co., more adults said they use Pandora to listen to music than Apple's iTunes."

Read more from The New York Times here and The Wall Street Journal here, and look for more on this in RAIN.

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