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Up Next for Apple: Streaming Music? An Easy Way To Rev Its Devices
By Adam Dickter
Posted: October 26, 2012 12:13pm PDT

Apple has been reluctant to take chances with the iPhone 5, said analyst Aapo Markkanen. "The iOS and the hardware have seen only incremental changes lately, and Apple doesn't want to take the risk of revamping them while the iPhone is still selling notably well." Streaming music, he said, would be an easy way to freshen up the devices.

Every top technology company knows that the key to the future is in offering hardware, software and services. That message surely is not lost on Apple. It became the most valuable company in the world with its computers and gadgets, but also runs its less-profitable iTunes, iCloud and App Store, mainly to enhance the user experience of its devices.

Its foray into social media, Ping, was a disaster and its recent attempt to duplicate Google Maps with a native application for the iPhone 5 was perhaps the company's biggest tech fail.

But Cupertino is far from giving up on outside-the-box thinking on services, as evidenced by the report Thursday that it's in discussion with top music labels to provide a music streaming service in the first quarter of next year. That could allow people to access a greater variety of music on iPads and iPhones, especially while driving.

Watch Your Back, Pandora

Bloomberg News said a deal could happen as soon as the middle of next month, as soon as the parties involved cross the T's and dot the I's by deciding how to split revenue from ads. In a sign that the service would directly challenge the Pandora music sharing service, shares of that company fell after the news broke.

The report said discussions were taking place with Universal Music Group, Warner Music Group and Sony Corp. and that Apple would run the service through an app that does not require using a browser.

Apple has been pursuing content-sharing agreements with major media companies on many fronts, from newsstand offerings and e-books for its iPad and TV to movie companies for iTunes and Apple TV.

We asked Aapo Markkanen, the London-based senior analyst for Devices, Applications & Mobility at ABI Research, for his take on whether an iRadio venture would be a success.

Taking Chances

"I don't think Apple's track record with non-hardware is too shabby," he told us. "Ping obviously was a failure, but Maps is still a work in progress and strategically a sound idea -- it simply has implementational glitches that need to be ironed out. And iTunes obviously has been a huge success and very instrumental in making Apple's devices so popular."

A key concern for the idea of music streaming, he added, is that Apple, in the post-Steve Jobs era, has been reluctant to take chances with the iPhone 5.

"The iOS and the hardware have seen only incremental changes lately, and Apple doesn't want to take the risk of revamping them while the iPhone is still selling notably well," Markkanen said. The radio service would be a way to freshen up the devices without changing the product.

" If you want to evaluate the iRadio's proposition, then as far as I see it'd be about addressing the limitations of the current iTunes approach -- which assumes that everybody buying music wants to have ownership of the tracks. The downside of the ownership-based model is that it doesn't allow users to discover new music or spontaneously listen to artists they might, or might not, like."

Tell Us What You Think
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JohnS:

Posted: 2012-10-27 @ 8:40am PT
I think Apple is riding a wave that is rapidly approaching the shore and don't see how it will be able to compete when the video wave crests. The true story is the trend; young people are opting to get their music through YouTube since they can watch or just listen.

As wifi and bandwidth become more available and as mobile phone plans get broader, it is only a matter of a few years before streaming music goes the way of the dinosaur and vinyl and is replaced by streaming video. YouTube has long ago realized this and they are leveraging the fact with their API which has enabled websites like http://www.fuhshniZZle.com to build streaming apps around the YouTube API that are YouTube Music centric.

YouTube has cut deals with all the major players for revenue sharing and is courting new artists and becoming a viable alternative to the traditional label. We live in exciting times for multimedia and it will get far better as technology continues to obey Moore's law.


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