Is Apple Planning to Take Down Pandora and Spotify?

“With sales of music downloads slowing, Apple and record companies are seeking new ways for customers to discover and buy digital music.” So said a Bloomberg report last October, which claimed that Apple was preparing an Internet radio service designed to rival Pandora and Spotify.

This week, 9to5Mac reported that “radio buy buttons” had been found in jailbroken iPads with iOS 6.1 installed. The names of the button files contain the word “buy” in the filename.

The Bloomberg article predicted that Apple would launch its new Internet radio service within the first three months of 2013. The prediction was made after executives from Warner Music Group, Sony Corp.

Music Division, Universal Music Group and Vivienda SA traveled to Cupertino last fall, reportedly to discuss Apple’s radio plans in greater detail.

Apple supposedly wants listeners to have the opportunity to buy tracks as the music streams. The company also wants listeners to be able to revisit tracks that they’ve listened to and liked via auto-generated playlists.

9to5Mac speculates that Apple may sell stations of music based on particular artists, songs or genres.

Apple supposedly wants a more flexible experience than that offered by Pandora, whose free version utilizes a compulsory license that limits both the number of times that listeners can skip tracks and the number of times one artist can be played in an hour.

Apple’s Internet radio will be delivered through an app on its iOS devices. The company reportedly has no interest in making streaming available through a Web browser.

As Apple has negotiated with record label executives, talks have focused on advertising. Record labels want to collect an upfront fee. They also want a cut of the ad sales and the freedom to insert specific ads that promote their own artists.

“If Apple offers a radio product, it will be far superior to anything else on the market,” said Rich Greenfield, a New York-based analyst working for BTIG LLC. “They’re seeking direct licenses to avoid all the restrictions that come with a compulsory license.”

Eric Brown, Pandora’s vice president of communications, stated that Pandora doesn’t concentrate on the ups and downs of its stock prices or the actions of its competitors. “We remain focused on our listeners and delivering the best Internet radio experience for them.”