Does Apple 'iRadio' pose a threat to commercial radio?

Most things Apple touches turn to gold. Should the industry be concerned, then, about its new venture? By Alasdair Reid.

Apple’s iTunes Radio service, scheduled for launch this autumn, will offer 200 "genre-focused" stations, each of which personalised for individual users, based on their listening history and past purchases from iTunes.

It will be available across a spectrum of devices – from iPhones, iPads and iPods to PCs and Apple TV boxes – and you’ll be able to choose whether you want to take the service for free, supported by advertising, or pay £21.99 a year to access it minus the ads.

In the past few weeks, there has been considerable speculation about what it might mean for established digital music companies such as Pandora and Spotify.

Pandora’s internet radio service (which launched in the US in 2005 but is still not available in the UK) has built its revenues slowly but surely. In 2012, it took $240 million in ad revenues and $34.4 million in subscriptions – yet it still managed to make a loss, thanks to the high cost of acquiring relevant music rights. It is likely to make a loss this year too.

Potential losses won’t scare Apple, clearly, which has the resource to live with some red ink if it sees long-term value in establishing itself in this market. And, actually, if it does so, you could argue that the people with the most to fear over the longer term are not the likes of Spotify and Pandora but the established radio stations at the heritage end of the broadcast business.

If it captures even a modest slice of listening time, Apple iTunes Radio could send shock waves through the industry – and help to accelerate a shift of advertising spend from non-interactive, linear media into the digital domain.

And given Apple’s dominant role in the music business generally (iTunes, which was launched in 2003, now has a 30 per cent share of all music sales worldwide), it’s not too hard to envisage it capturing a decent audience almost overnight.

On the other hand, iTunes Radio isn’t actually "radio" at all – you could argue that it’s always likely to struggle because it lacks the real-time "event" experience that good DJs bring to the medium. So, is this a threat to established commercial radio?


NO Erica Taylor, trading operations director, Starcom MediaVest Group

"Consumers inevitably tune into different types of music depending on their mood and this will also dictate if they want constant music or interaction from the presenter. IRadio will be a part of their station mix but it won’t replace it."

NO Steve Parkinson, managing director, Bauer Radio London

"I think there’s a place for both. Listeners to radio still want the presenter telling them about the world around them. With brands such as Kiss, they turn to it for recommendation and to act as an editor for their music and lifestyle choices."

MAYBE Alex Jeffries, head of communications strategy, LBi

"In the short term, I don’t envisage iRadio having a significant impact on commercial radio, but it will threaten digital platforms. Longer term, stations will need to innovate in response to the growth iRadio will drive in the digital market."

NO Tony Moorey, content editor, Absolute Radio

"It’s competition for services such as Pandora and Spotify – it’s no threat to radio stations that offer engaging programming. Though it’s true that more stations need to make the most of the digital commercial opportunity."