Apple’s iTunes Radio: Should Pandora Be Worried? What This Means for the Future of the Music Industry by Dan Ainspan An indepth review of Apple’s new streaming music service, plus a look at how it could impact future music sales Apple recently released its new mobile operating system, iOS 7, on September 18 th . Along with a complete design overhaul and an addition of over 200 new features, Apple finally managed to enter the music streaming game with its own Pandoralike service, dubbed “iTunes Radio.” Originally announced at its annual WWDC event earlier in June, iTunes Radio has now been officially released to the public, bringing consumers yet another service to choose from in the highly congested music streaming business. Services like Pandora, Last.fm, Slacker, Spotify, Rdio, Xbox Music, Google Play Music, and now Apple are all fighting for a thin slice of the pie. What does iTunes Radio offer that others do not, and more importantly, what does this new service mean for the future of music and consumption? Let’s dive in: Access The first and most obvious place to start would be how to access iTunes Radio. Unlike services such as Pandora and Rdio, which have separate downloadable apps for iOS/android and standalone websites for consumers, iTunes Radio is actually baked right into iOS 7. Once in the music app, simply tap on the new iTunes Radio icon down on the left and you’re in. This is a huge selling point for Apple. In fact, iTunes Radio is the first online
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Apple’s iTunes Radio: Should Pandora Be Worried? What This Means for the
Future of the Music Industry by Dan Ainspan
An in-‐depth review of Apple’s new streaming music service, plus a look at how it could impact future music sales
Apple recently released its new mobile operating system, iOS 7, on September 18th.
Along with a complete design overhaul and an addition of over 200 new features, Apple
finally managed to enter the music streaming game with its own Pandora-‐like service,
dubbed “iTunes Radio.” Originally announced at its annual WWDC event earlier in June,
iTunes Radio has now been officially released to the public, bringing consumers yet
another service to choose from in the highly congested music streaming business.
Services like Pandora, Last.fm, Slacker, Spotify, Rdio, Xbox Music, Google Play Music,
and now Apple are all fighting for a thin slice of the pie. What does iTunes Radio offer
that others do not, and more importantly, what does this new service mean for the
future of music and consumption? Let’s dive in:
Access
The first and most obvious place to start would be how to access iTunes Radio. Unlike
services such as Pandora and Rdio, which have separate downloadable apps for
iOS/android and standalone websites for
consumers, iTunes Radio is actually baked right
into iOS 7. Once in the music app, simply tap
on the new iTunes Radio icon down on the left
and you’re in. This is a huge selling point for
Apple. In fact, iTunes Radio is the first online
radio service built into millions of devices already in wide circulation. How many friends
do you know own an Apple device? Exactly. This was a genius marketing decision on
Apple’s part. This means anyone who
decides to upgrade to iOS 7 will
automatically receive iTunes Radio,
whether they want it or not. It’s right
there, built secretly into the music app
(iTunes Radio is also available in the
updated iTunes software for Mac/PC).
The way Apple has unified its pre-‐
existing music app with its new
streaming service is not only aesthetically appealing, but it makes sense. Users don’t
have to worry about switching apps just to start a radio station. All of their music,
including content purchased through the iTunes store, and yet-‐to-‐be discovered music
through streaming, is all in one, easily accessible place. It will be very tough for the
streaming giant to compete with that kind of visibility and ease of access, especially on
the increasing use of mobile platforms. Specifically, Pandora reports a user base of
roughly 200 million people, which trumps fellow streaming services such as Spotify (only
24 million). However, that is only a little over a third of Apple’s massive 575 million
iTunes users (Graham).
Pricing and Limitations
For those unfamiliar with music streaming services, iTunes Radio will operate in a similar
fashion to companies like Pandora and Rdio, in that it will play internet radio stations
based on any artist, song, genre, or a combination of the three. Unlike Spotify, an on-‐
demand service where users simply select whichever song they wish, iTunes Radio and
Pandora bring the music to you, relying on heavily curated stations. iTunes radio is free
with ads, but consumers can enable ad-‐free streaming with a $25/year subscription to
iTunes Match (Buskirk). Users are also able to skip 6 songs per hour, per station. Once
in the app, you can create a new station based on any artist,
genre, or song. Apple has also included an array of pre-‐
programmed featured stations, including iTunes Top 100:
Alternative, Pure Pop, and The Beatles Radio. After a few
minutes of experimenting and creating my own personalized
stations, I can say that iTunes Radio did a fairly good job at
selecting new music based on the artist or genre I had selected.
It seems Apple has also paired up with a slew of powerful
sponsors, including McDonald's, Nissan, Pepsi and Procter &
Gamble, perhaps for future sponsored stations and other marketing efforts. This is all
nice, but I would say Pandora still wins in the number of genre-‐based stations and
playlists that are currently available, as they have almost 10 years of experience
constructing complex algorithms with their Music Genome Project. However, you can
bet to see more from Apple in the near future.
Content
One major difference between Apple’s iTunes Radio and so many other streaming
services such as Pandora is that Pandora operates under the laws and guidelines for
Internet radio. This means that Pandora is free to play any music that it likes, as long as
it pays the standard Internet radio royalty fees per stream that are collected by
Performing Rights Organizations; namely ASCAP, BMI, and SESAC. Apple, however, has
struck deals with all three major labels; SONY, Warner, and Universal Music, which
means they will have access to millions of songs on their respective catalogs, along with
music already on the iTunes store. Apple also claims that iTunes Radio will be offering
exclusive content, such as album releases and studio sessions that could make their way
onto the service before they come out in stores. Perhaps a small attempt by Apple to
differentiate their service form rival competitors. It also appears that iTunes Radio will
be available wherever iTunes operates, in over 100 countries, while Pandora currently
only reaches the U.S., Australia, and New Zealand (Ramsey).
Features
One of the more intriguing features of iTunes
Radio is the level of control over how a song
suggestion algorithm selects its next tune, a
feature that could attract many curious
Pandora users. Apple provides slider settings
that can be set to play just "hits" or actively
seek out songs you've likely never heard
before. Users also have the option to “play
more like this”, “never play this song,” or add
it to their iTunes wish list. The fact that iTunes Radio is built directly into iOS 7 gives it
some additional advantages. You can use it with Siri to call up your favorite station, or to
hear music similar to your favorite artist. Deep integration with iTunes also makes it
incredibly easy to purchase any song you might fall for; just tap the price in the right
hand corner. You can also easily share information about a particular station you’ve
created by tapping the “Share Station” button. This gives you the option to share via
message, email, Twitter, and Facebook, as well as a simple URL link to copy (Bell).
Competition, Should Pandora Be Worried?
All in all, iTunes Radio is a fairly standard and simplified streaming service, similar to
what is currently on the market. However, like Apple is so commonly known for, they
tend to play the waiting game and release more derivative products or innovative
services that have mass appeal to the mainstream consumer. Will it be enough for loyal
Pandora users to make the switch? No, I think Pandora will still retain a majority of the
market share, at least for now. They’ve been in the streaming business for too long for
a new service like Apple’s to squash their thunder. One thing that is for sure, however,
is that competition is good for the industry. It’s good for consumers and ultimately the
companies who wish to last. It forces them to innovate, to constantly strive for
something better. Pandora may be on top now, but if they don’t address the
competition in a way that’s favorable for consumers, newer services like iTunes Radio
could take over.
It is also important to note that iTunes Radio and other services like Pandora, although
very similar in content, have two somewhat different philosophies. Although both
services are aimed at the discovery of music, Apple is intent on getting consumers to
buy more music. It is evident throughout the app (iTunes wish lists, easily accessible
purchase buttons and links to iTunes store). Pandora, on the other hand, has no
financial obligations to bear for the labels and corporate sponsors. Its goal is to keep
you glued as a listener. Pandora sells the ads and subscriptions and leaves the
purchasing of music to companies like Apple and Amazon.
The Big Picture
Like other music streaming services already out there, Pandora should be excited, at
first, than perhaps a little concerned, for they will have to keep advancing if they wish to
remain on top. Fortunately for them, Apple’s mainstream appeal and success within the
music business will only heighten the need for music streaming in consumers’ eyes.
Mainly, if Apple now has a streaming service, then it must be relevant. (Maybe I should
check this streaming thing out?) This awareness for the average consumer is incredibly
important, and for Pandora, they can leverage their experience and popularity to attract
even more potential users.
For Apple, just how they created such an impact with the CD, the iPod, and the sale of
digital music through iTunes, they have the potential to “re-‐invent” the way we
consume music, through streaming. The theory is, that if more and more people were
streaming music for free and discovering a mass amount of new music that is enjoyable
to them, then perhaps they would slowly ease into purchasing that new music and
supporting the artists, which in turn would help revive the marketplace into a more
lucrative and rewarding business, especially for the musicians. That’s the hope.
According to a mid-‐year report published by Nielsen SoundScan and Billboard, audio and
video music streams were up a staggering 24% to 50.9 billion from last year, while
digital sales fell 2.4% (Lauria). Apple is trying to take a slice of the ever-‐expanding
streaming business, while hopefully increasing its digital music sales along the way.
Will iTunes Radio prove to be the new way we discover and purchase music, and will it
lead to an overall increase of music sales and consumption? Unfortunately, only time
will tell, but I certainly do hope so. For more information on iTunes Radio you can visit
Apple’s website at http://www.apple.com/itunes/itunes-‐radio/.
Works Cited Bell, Donalad. iTunes Radio vs Pandora. 10 June 2013. <http://reviews.cnet.com/8301-‐19512_7-‐57588579-‐233/itunes-‐radio-‐vs-‐pandora/>. Buskirk, Elliot Van. Apple’s iTunes Radio Drops on September 18 – Here’s What To Expect. 10 September 2013. <http://evolver.fm/2013/09/10/apples-‐itunes-‐radio-‐drops-‐on-‐september-‐18-‐heres-‐what-‐to-‐expect/>. Graham, Cameron. Why iTunes Radio Could Take Down Pandora. 13 September 2013. <http://technologyadvice.com/why-‐itunes-‐radio-‐could-‐take-‐down-‐pandora/>. Lauria, Peter. Two Stats That Explain Why Apple Is Getting Into Streaming Music. 19 July 2013. <http://www.buzzfeed.com/peterlauria/why-‐apple-‐is-‐getting-‐into-‐streaming-‐music>. Ramsey, Mark. 4 Ways iTunes Radio Changes Everything. 11 September 2013. <http://www.pbs.org/mediashift/2013/09/4-‐ways-‐itunes-‐radio-‐changes-‐everything/>.