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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 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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Page 1: Apple’siTunesRadio:’Should’Pandora …danainspan.com/wp-content/uploads/2015/10/iTunes-Radio.pdf · 2015-10-07 · Apple’siTunesRadio:’Should’Pandora Be#Worried?What#ThisMeansfor"the

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  

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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  

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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).  

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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  

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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  

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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/.    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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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/>.