| SAN FRANCISCO, June 5
SAN FRANCISCO, June 5 Apple Inc is
gearing up to sell audio ads on a music-streaming service it
intends to unveil at its developers conference next week,
according to people familiar with the plan, going up against
Google Inc and Pandora Media Inc in the
increasingly competitive market for mobile tunes.
The iPhone maker, which has been working to put together a
streaming music service for the past year, has contacted some of
its bigger advertisers but hasn't started selling the service
extensively yet, one of the people said.
The music service, dubbed "iRadio" by the tech industry and
media, is expected to closely resemble Pandora Music in its
monetization strategy. It will feature audio and banner ads sold
through Apple's iAd mobile network, said the people who were not
authorized to speak publicly.
The service, which is expected to launch later this year,
will also have ads currently sold by the iAd division, they
When finally launched, Apple will become the latest entrant
to an arena that sources say tech giants from Amazon.com Inc
to Facebook have considered joining.
It's unclear what features the service will have, though
Wall Street analysts and technology blogs speculate it will,
like Pandora, operate much like an online radio station that
streams a selection of music based on users' preferences.
Mobile device makers see a viable music streaming service as
crucial to ensuring users remain loyal to their mobile products.
About 48 percent of smartphone users listen to music on their
device, making it the fourth most popular media-related activity
after social networking, games and news, according to a ComScore
survey of mobile behavior released in February.
Holding onto users is key to Apple, which gets the lions'
share of its revenue from the sale of devices rather than the
sale of digital content such as songs and TV shows.
The new ad-supported music service from Apple, which
pioneered and now dominates music purchases through iTunes, is
expected to be free to users. The other business model - adopted
by rivals Google and Spotify - is an ad-free subscription model
where consumers pay a flat fee for listening time.
A spokesman for Apple declined to comment about audio ads
for the music streaming service, which was first reported by
industry publication AdvertisingAge.
WWDC OPENS NEXT WEEK
Apple's Worldwide Developers Conference, which starts
Monday, is expected to showcase the latest improvements to its
iOS mobile operating software. It has also used the multi-day
affair in the past to show off its latest Macintosh computers.
Apple has made selling ads for the new music streaming
service a focus for its iAd unit, which will continue to sell
regular mobile ads. Selling big-brand campaigns to advertisers
would be a key priority for the unit, the people said.
To ensure the service debuts with ample content, Apple has
been rushing to ink deals with the music industry.
Apple has agreements in place with Warner Music Group and
Universal Music Group but remains in talks over music rights
with Sony Music Entertainment as well as its separate publishing
Streaming music remains a nascent market, dwarfed by music
sales via outlets such as iTunes, but one that is attracting
Apple's streaming music service will compete with popular
existing services such as Spotify and Pandora, which has about
70 million active listeners.
The rising cost of licensing has forced Pandora, whose
revenue comes mainly from advertisers, to introduce a cap of 40
hours of free listening on mobile devices. A $3.99 subscription
is required to venture beyond that limit.
The other deep-pocketed player that started offering
music-streaming is Google with its "All Access" service which
allows unlimited listening for $9.99 a month. It launched its
service last month, ahead of Apple.
Shares in Pandora have plunged 17 percent this week as
reports circulated that Apple was close to announcing its rival