Apple’s iRadio – A golden apple for music consumers?

Next week, “iRadio”—Apple’s alleged streaming music service—is likely to be unveiled. And what we’re all wondering is: Will iRadio change the music space dramatically like iTunes did many years ago, or is this simply a game of musical chairs in the streaming music space? The buzz grows more intense with the latest news of Warner Music Group jumping aboard just one week before the upcoming Apple’s Worldwide Developers Conference (WWDC). So we ponder: What benefits does Apple have over current streaming competitors, and what can Apple offer that consumers really want but don’t yet have in a music service?

Apple’s unprecedented success in the digital music business and its ownership of iTunes with its existing gigantic consumer base is a big benefit. 500 million iTunes accounts vs. 70 million active Pandora users provide an immediate massive advantage. Moreover, it is virtually guaranteed that iRadio will be tied to iTunes, offering a myriad of additional advantages over Pandora including: The power to access personal libraries seamlessly, ability to directly purchase songs, increased music discovery via recommendations made from current library contents and features like rewind/fast forward in songs.

Not to mention Apple’s enormous advantage in terms of hardware and synchronization. Apple has already sold over 250 million iPhones and over 100 million iPads with their pre-installed iTunes app. And Apple’s iCloud already gives consumers the ability to synchronize their music on multiple devices, providing the backbone for a streaming music service on multiple devices and a more unified user experience.

Here’s the good news for the music industry: Published reports confirm that Apple will pay music rights holders higher initial rates than Pandora and a greater share should certain monetary goals be met. Is this a chance for the music industry to really make money on streaming? Perhaps there’s a chance here for deeper partnership and promotional opportunities for the music industry to take advantage of. Record labels in partnership with Apple could provide exclusive content consumers won’t find on other services (advanced streaming, some of which are taking place on iTunes now, unreleased performances or works that are offered exclusively on iRadio). Certainly, there will be opportunities to showcase your artist in the advertising for iRadio and within the program itself for whoever gets there first.

Beyond tying iRadio to iTunes and synching the experience on multiple devices, what innovations can Apple offer in this space? Will consumers get on-demand access, third party song choices or both? The name “iRadio” itself implies live-streaming of existing “over the air” radio, which will encroach upon iHeartRadio and TuneIn territory if incorporated. Will consumers get more control or integration of local weather, traffic, news and talk as custom options? And how will iRadio incorporate ads? Apple’s approach to ads will be a major factor since poor ad integration and ad overload are common consumer complaints about existing free services.

Initially, one might wonder why Apple would risk cannibalizing its own powerhouse music store with a streaming service—potentially undermining the music industry’s revenue stream and Apple’s own from iTunes. Apple’s CEO Tim Cook takes this viewpoint: “Our core philosophy is to never fear cannibalization. If we don’t do it, someone else will.” Apple has shown it’s no dummy in predicting the future direction of the world when it comes to music and technology, and we’d bet iRadio will be no exception.

Historically Apple seems to have the knack for taking the hassle out of technology, suggesting they may have the power to turn on a broader audience to streaming music. About a third of Americans are streaming radio of some sort on a regular basis right now; iRadio has the potential to increase streaming exponentially. But we still haven’t answered the question of what Apple will bring to streaming to attract the masses. What else do consumers want in streaming that doesn’t already exist? Surely iRadio won’t just be a Pandora or Spotify clone. It’s Apple. We expect the company that brought digital music to the masses to reveal something magical that no one else has thought of or been able to pull off yet. Something that will rearrange the streaming music space for consumers that wows us by its ingenuity and simplicity simultaneously…a modern expression of the form that is more than just streaming songs on demand or playing songs picked by an algorithm. Something we’ve all been wanting but don’t even realize it yet.

So what else do consumers want? Universal access, less intrusive commercials, a better algorithm that’s based off of our own library, additional features, a different music entertainment experience? Steve Jobs reportedly once said: “Innovation is not about saying ‘yes’ to everything. It’s about saying ‘no’ to all but the most crucial features.” Will Apple again get the crucial features right in the music space at the right time as they did with iTunes? Will Apple’s iRadio be a mere bite out of the streaming music landscape, or will iRadio emerge as the golden apple that we all just can’t resist?