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Apple Adds Sony to iRadio Playlist

By Peter Suciu MacNewsWorld ECT News Network
Jun 7, 2013 4:24 PM PT

Sony Music has jumped on board Apple's forthcoming streaming music service, according to numerous reports on Friday, meaning that Apple has now secured support for its anticipated offering from each of the big three music labels.

Apple Adds Sony to iRadio Playlist

Warner Bros. and Universal reportedly reached agreements with Apple earlier in the week. An official announcement is expected at the Apple Worldwide Developers Conference next week.

Apple did not respond to our request to comment for this story.

'Critical for Apple'

It's generally believed that Apple has been aggressively negotiating with the labels in an effort to create a streaming service of its own, commonly referenced in accounts as "iRadio." Such a service could deliver free, ad-supported music to iOS devices.

Sony's participation was essential to the potential success of that effort, Charles King, principal analyst at Pund-IT, told MacNewsWorld.

"The news about Sony coming on board for the iRadio service is, frankly, critical for Apple," King said. "Sony has such a huge footprint in modern music that proceeding without it would have crippled Apple's plans."

In fact, Apple "was probably forced to make concessions to Sony to get this deal done," King added. "Remember, it was just a few weeks ago that Sony's decision to join in Google's music service was considered a significant blow to Apple, especially with its WWDC just around the corner."

Late to the Game

Even with that essential support, however, it remains to seen whether Apple can do for streaming what it did with music downloads via iTunes.

"Music is central to Apple's success," Josh Crandall, principal analyst at NetPop Research, told MacNewsWorld. "While iRadio may not turn into a big profit center, it can be a sticky service that is important for the success of other media initiatives the company pursues.

"Apple is late to the game, but they will be able to integrate the service into their hardware platform so it's easy and intuitive for users," Crandall added.

Of course, Apple hasn't always been first to market. With iTunes and the iPod, for instance, Apple came into an established market and made it its own.

'It Isn't About Being Profitable'

"Apple has always been really bad at cloud-based offerings, but that might not matter in this case," Rob Enderle, principal analyst at the Enderle Group, told MacNewsWorld. "It isn't exactly about being profitable this time. It is more about getting people wedded to Apple's services."

iRadio streaming to iOS devices could be a way to get those who haven't been streaming users so far to embrace what Apple offers and in turn stick with iOS down the line.

"This is a method to tie users to specific devices," said Enderle. "In this case, it will tie people to the iPhone."

Strong Currents

Further complicating the situation is the degree of competition out there already. Apple might not need to make a profit, but it certainly wouldn't want to lose money, either.

"There are multiple streaming services," noted Greg Sterling, principal analyst at Sterling Market Intelligence.

Apple would most likely use a model akin to Pandora's: "ads or ad-free with a subscription," Sterling told MacNewsWorld. "If they were to try and do that, it would require a new, more serious effort around advertising. iAd has been very mixed for them."

The Financial Factor

Ultimately, of course, Apple must surely be thinking about a revenue stream, at least down the road.

"Monetizing the service will likely be accomplished -- as it is with Pandora -- via a combination of subscriptions and streamed ads," said King. "The lower-cost the subscription, the larger the number of ads you'll hear.

"Google has an obvious advantage here, mainly due to its experience and market position, but Apple obviously has the wherewithal to effectively catch up," King added.

'A Contentious Subject'

Now that both Google and Apple have joined the streaming fray, meanwhile, it's likely both radio and the music industry will change yet again in the upcoming months and years.

The new landscape, in fact, could end up benefiting the artists.

"A formal service/payment model should include a mechanism for paying artists' royalties," said King.

That, however, "has been a contentious subject in its own right," he added. "It'll be interesting to see how Apple and Google and their music industry partners address the issue."

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