It has been widely speculated that Apple has been working on a Pandora-like music service.
Bloomberg now reports Apple is hoping to wrap up the deals with major music labels for its music streaming service in the next few weeks so that it can launch it in the first quarter of 2013.
Apple Inc. and major music labels have intensified negotiations to start an advertising-supported Internet radio service by early next year, according to people with knowledge of the talks.
Talks are centered in part around how to share ad revenue and a deal could be reached by mid-November, with Apple starting a service within the first three months of 2013, said the people, who asked not to be named because discussions are still in progress.
The reports claim that Apple is working with record labels to get a more permissive license than the one Pandora gets, so that users can you play the same song multiple times. Apple is also seeking early access to new releases.
According to Bloomberg sources, executives from Universal Music Group, Warner Music Group, and Sony visited Apple’s headquarters to learn more about Apple’s music streaming service.
The negotiations have centered around advertising, the people said. In addition to an upfront fee, record companies are seeking a percentage of ad sales and the ability to insert their own commercials for artists, they said. Apple sees the service as a way to grow its iAd mobile advertising platform, and is exploring ways to integrate iAd with iTunes to steer customers back to iTunes.
Apple’s custom-radio service is likely to come bundled with iOS devices like iPhones and iPads.
Though it’s quite difficult to make money in the ad-supported music streaming service, it makes sense for Apple to bundle the service with iOS devices as it could drive more stickiness to the iOS platform and encourage more hardware sales. In fact, with launch of services by rivals like Xbox Music by Microsoft, it is now a must-have rather than a nice to have for Apple’s ecosystem of products.
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