Apple To Challenge Pandora in 2013

Apple Inc. and major music labels have intensified negotiations to start an advertising-supported streaming radio service by early next year, according to a story by Andy Fixmer and Adam Satariano at businessweek.com.

Discussions 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 talks are still in progress. Shares of Internet-radio leader Pandora Media Inc. plunged the most since Sept. 7.

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.

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