With sales of music downloads slowing, Apple and record companies want to create new ways for customers to discover and buy digital music. To challenge Pandora, Apple is seeking licensing pacts with labels that allow more flexibility about what listeners hear. Pandora relies on a compulsory license that limits how often users can skip tracks and how many times an hour an artist can be played. Apple is also pushing for earlier access to new releases.
“Radio is a natural step for Apple,” Rich Greenfield, an analyst with BTIG LLC in New York, said in an interview. “This helps Apple dominate in cars, where people listen to an average of two hours of radio a day.”
Pandora, based in Oakland, California, declined 12 percent to $8.20 at the close in New York, after Bloomberg News reported on Apple’s progress on talks with the labels. The shares have lost 18 percent this year.