1. iTunes Radio US Digital Team
Edited by
Eridani Baker
21/08/2013
Background
iTunes Radio, tipped to launch in September
2013, will be an integrated part of the on device
iTunes experience. The new product will be built
into the iOS software and will initially be
available in the US only across iOS7 –
compatible on iPhones 4+ and iPad 2+. It will
not be available as a standalone app. It will use
an algorithm to search users purchase history to
create custom stations.
Implications & details
iTunes Radio seems an obvious attempt to
compete with Spotify and more directly Pandora
which, mainly due to copyright laws, also
operates only in the US. However, Apple will no
doubt be looking to expand; so how does iTunes Radio stack up against Spotify?: In terms of
libraries iTunes wins, with over 35 million songs vs. just 20 million on Spotify; iTunes Radio will be
available free and on the go across tablet and iPhone, whilst Spotify Free is only available on
desktop; iTunes Radio will be ad supported, just like Spotify Free, but whereas free listening on
Spotify is capped after 6 months at 2.5 hours a week, iTunes radio will be unlimited. Perhaps the
most crucial difference is like Pandora, but unlike Spotify, iTunes Radio has less user control as it
doesn’t feature a search and play function - the goal is instead to get you to listen, like and buy
tracks from the iTunes store based on an algorithmically created playlist.
iTunes Radio advertising opportunities will be similar to those on Spotify. Ads will be
demographically targeted and will click through to an advertisers’ site. Targeting data will be taken
from iTunes preferences and context (device, location, music genre, artist etc). At present there are
no plans for a more in-depth offering like Spotify’s artist pages.
In recent years iTunes has run a successful paid video distribution channel, as the iTunes Radio
product develops it will be interesting to see if a music video service is added, potentially adding
YouTube to its list of competitors.
Taking learnings’ from Ping – Apples failed social network play - iTunes Radio seems to be an
environment in which, if it is easily possible, sharing will naturally occur.
The fact that all new Apple products will come with iTunes Radio already baked in will be a huge
driver of traffic. The fact that the new product will be available via software update on all iPhone 4+
and iPad 2+ devices from launch will give iTunes Radio an instant potential audience of roughly
200million users, making it a strong competitor for Spotify and Pandora. The new product does not
currently compete with applications such as TuneIn and iHeartRadio, which allow users to access
local Radio stations via their phone, but from an advertiser perspective these type of radio
applications do not offer custom mobile advertising solutions, mainly selling their inventory to
networks. So iTunes Radio is a more interesting proposition.
Summary
Apples device penetration gives any new launch a great chance of success. If Apple has learned
from Ping then Spotify and Pandora should be worried. For advertisers, it redefines ‘radio’ and
pushes it back into the heart of the media plan.