updated 03:23 pm EDT, Wed June 5, 2013
Advertising deals to be handled via iAd network
Apple is planning to sell both audio and banner ads for its upcoming streaming music service, often nicknamed iRadio, claims Ad Age. The information is said to come from a former Apple executive familiar with the situation. Ad sales will reportedly stem through iAd, which so far has concentrated only on interactive banner ads in iOS apps. It's thought that iRadio could be announced at WWDC, which starts June 10th.
Ad Age notes that audio spots could be especially profitable for Apple, since they often cost more than banners. Apple is also expected to keep more of the money from them, since while 70 percent of the revenue for iAd banners currently goes to app developers, Apple may have to pay as little as 10 percent of iRadio ad revenue to music rights holders. By comparison, Pandora only pays out 4 percent.
An anonymous music industry executive said to be familiar with talks between Apple and the major record labels says that the terms for iRadio are more favorable than with other streaming services, because iRadio is predicted to generate more song downloads. The former Apple executive indicates that iRadio will also be able to target ads based on all of a person's entertainment tastes, since it will be integrated with iTunes.
Ad Age sources back reports that both Warner and Universal have signed deals to put music on iRadio. A spokesman for Sony has refused to comment on its own participation, but a spokesman for Sony/ATV says the label is optimistic it will sign a deal with Apple in the near future. Ad Age suggests that ATV is aiming for no less than 10 percent of iRadio's related ad revenue. ATV is in a unique situation, owning copyrights for artists like Bob Dylan and The Beatles, but not the physical recordings.