Apple finally introduced the world to its anticipated Internet radio service at its World Wide Developers Conference Monday. Called iTunes Radio, the service works on iPhones, iPod Touches, iPads, iTunes on Mac computers and AppleTV. It will be available first in the United States -- it’s due out this fall but Apple has not given an exact date -- and other countries at later dates.
iTunes Radio has featured stations and also allows users to create their own stations based on artists, songs or genres. When a song is playing, listeners can ask iTunes Radio to play similar songs or never play the song again. The service lets users see a history of songs listened to and buy the tracks.
As expected, iTunes Radio is a free service that is supported by advertising. Apple is making iTunes Radio ad-free for people who pay $24.99 per year for iTunes Match.
Apple is playing catch-up in the United States. Pandora has over 200 million registered users and more than 70 million monthly listeners in the United States. It commands a 7.3% share of total U.S. radio listening -- a figure calculated internally -- and 58% awareness in the United States, according to NPD Group. The company does not break out its numbers on its listeners in Australia and New Zealand.
But Apple has far less to overcome in other countries. Pandora fully launched in Australia and New Zealand just late last year. Few other markets have viable competitors that are standalone radio services. Although Deezer, Spotify and Rdio operate in dozens of countries, they are on-demand services in which radio is a feature rather than a specialty.
Apple has negotiated licenses with record labels rather than use the compulsory license available to non-interactive webcasters. Sources have told Billboard that Apple will pay major labels around 0.16 cents per stream in addition to a share of advertising revenue, but payments will begin only after the service grows beyond a specific threshold. Direct licenses will allow iRadio to offers features not available to DMCA-compliant Internet radio services like Pandora and will allow it to operate outside of the U.S.
Apple has some important advantages. The company has sold 600 million iOS devices globally that can run the Internet radio app. It has 575 million iTunes accounts, most with credit cards and one-click buying, and a 63% share of the paid download market (in the fourth quarter), according to NPD Group. The incremental revenue from downloads will bring an additional dimension to a type of service that has historically struggled to attain profitability.
The two-hour presentation also provided a look at iOS 7, the latest mobile operating system, and its new Mac operating system, OS X Mavericks. It also featured a stream of statistics: The App Store has had 50 billion app downloads in its five years of operation. Developers have been paid $10 billion from paid apps and in-app purchases. The store now carries 900,000 apps -- 375,000 for iPads -- and 90% are downloaded each month. It has reached 300 million iCloud accounts less than two years after launch.