As Apple Reportedly Nears Streaming Licensing Agreements For iRadio, Competitors Should Circle The Wagons

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Apple is said to be getting very close to nailing down streaming licensing agreements with Universal Music Group and Warner Music, according to sources speaking to The Verge. The report follows news from the NY Post that claimed Apple was well under where labels were expecting in terms of its streaming rates, and now says that Apple’s service will pay fees pretty much on par with those paid by Pandora. If Apple does launch this service, it’s about to become a lot harder to operate as a competitor in this space.

The so-called iRadio service, as it’s often referred to, has on-demand streaming as well as radio style play, according to the report, which means that it could compete not only with Pandora and Last.fm but also with Spotify and Rdio. Those companies have a first-mover advantage in the streaming market, and one that has helped Pandora pass the 200 million user mark just this week. But Apple has over 400 million active iTunes accounts, according to data that’s now over a year old, with credit cards on file. That’s more than double Pandora’s numbers, and it represents an active population, not just total registered users.

Apple has yet to make as much progress with Sony Music Entertainment, but once that piece of the puzzle falls into place it reportedly hopes to launch a service as early as later this year. It’s an eventuality streaming services have likely been anticipating and preparing for anyway, but it’s hard to overstate the impact of the single largest force in digital online music sales getting into the streaming business – Apple recently announced that it had sold its 25th billion song through the iTunes Store, which translates to a lot of consumer influence.

Apple could also have a big advantage in terms of international market reach. Other streaming music companies have been slow to expand, and reach only a fraction of the markets that Apple can on a global scale. There’s no guarantee that Apple would be able to launch an iRadio product in all the markets where it currently offers the iTunes music store, but it did a good job of rolling out iTunes Match quickly to international locations, so it’s reasonable to expect it could do the same for streaming services.

For startups and streaming music companies, this means looking closely at the competitive advantages offered by their own platforms and decided how best to position their own services. A key advantage, and one that will likely get emphasized by virtually everyone challenged by an iRadio, is cross-platform compatibility. Apple will likely be able to offer something along those lines through iTunes on Windows, but for the most part it’ll be a strictly iOS/Mac affair. That, combined with personalization and recommendation engines, along with other value add features, will be the way to combat an iTunes streaming service, but no matter what, an Apple product will change the face of this market.