A Look At Apple's Music Streaming Plans

We're learning more and more each day about the planned Pandora-like streaming service planned by Apple (see this post for more info). It appears that Apple is still in discussion with the major labels on the license fee that they'll be paying, which is complicated by the fact that Apple wants to implement some interactive features in the product to distinguish itself from either Pandora or iHeartRadio. This is a complicated issue on so many levels, but suffice it to say that Apple wants to pay the least it can while the labels want the most.

It's been reported that the labels are also demanding a couple of things besides the license fee:

1. A way to refer listeners back to the iTunes Store (like a "Buy" button) to stimulate sales so that the streaming doesn't cannibalize it. I'm sure that Apple would like the same thing, but once this streaming cat is out of the bag there's no reason to own the song any more. In fact, Pandora has the same thing and it's been reported that it hardly throws off any revenue.

2. The ability to program tracks to fit the listener's profile, which they can't do now with Pandora.

2A. There's been some talk of even allowing programming on a geographic basis, which is perfect for an indie artist or band just building an audience.

You can bet that this is going to happen sooner than later despite the fact that Pandora has a huge head start. iTunes has a global customer base of 465 million users, and there are 335 million iPods, iPads and iPhones out there, so their potential reach eclipses everyone else in the market. The problem is, this will be another nail in the downloadable music coffin as consumers get more and more used to renting music instead of buying it.

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