Apple preparing to launch ad-backed music service

Apple is preparing to sell audio ads on new a music streaming service, sources have told Reuters.

The music service – dubbed ‘iRadio’ by the tech industry and media – will put the media giant in direct competition with other services in the mobile music market, including rivals Google, Pandora Media and Spotify.

According to sources, ‘iRadio’ will closely resemble Pandora’s monetisation strategy – featuring audio and banner ads sold through Apple’s iAd mobile network.

Expected to be unveiled next week and launched later on this year, it has been speculated that Apple’s service will also have ads currently sold by the iAd division. Apple has made selling ads for the new streaming service a focus for its iAd unit, which will continue to sell regular mobile ads.

‘iRadio’ is expected to be free to users, unlike Spotify and Google’s ‘Google Play Music All Access‘, which both charge $9.99 per month for unlimited listening.

The news comes as reports reveal a -17% drop in Pandora shares – a company whose revenue comes predominantly from advertisers. There is a $3.99 subscription fee to surpass Pandora’s 40 hour free listening limit on mobile devices – a significantly lower charge than both Google and Spotify.

Wall Street analysts and technology blogs speculate that ‘iRadio’ will, like Pandora, Spotify and CBS-owned Last.fm, operate much like an online radio station that streams a selection of music based on users’ preferences.