iTunes Radio: Smart For Apple, “Meh” For Users, And Harmless For Pandora

Why a me-too streaming music app is good enough for Apple.

On Wednesday, the Bubble Wrap officially comes off of iOS 7, and with it Tunes Radio.

For consumers, iTunes Radio might feel like little more than a Pandora clone with different guts and a polished interface. For Apple, that's all it needs to succeed.

Apple's entry into the Internet radio space makes good business sense for the company, especially as the mere concept of selling digital music files is challenged by the rise of all-you-can-stream subscription upstarts like Spotify. Make no mistake about it: iTunes Radio isn't about dethroning Pandora as much as it's about getting you to buy more music.

Another Doorway Into The World's Biggest Music Store

When most of us think of iTunes, we picture that clunky desktop application we begrudgingly use to manage our music and mobile devices. But in reality, that software is just one gateway into Apple's expansive e-commerce empire for digital content, which is what iTunes really is: a very lucrative store. Across 119 countries, the iTunes Store has 500 million users, who are collectively spending more and more money on digital content ($2.4 billion in Q2 of this year, for example). As GigaOm's Erica Ogg pointed out in May, Apple's content business could one day outpace Mac sales to become the company's third biggest source of revenue.

iTunes Radio

But the model of music distribution that made iTunes the biggest music retailer on the planet isn't future-proof. Its most potent threat comes from the all-you-can-stream music subscription model championed by Spotify, Rdio, and even Apple's arch rival, Google. For about $10 per month, users can access a library of many millions of songs, stream them at high-quality bit rates and even store them locally on just about any device. For voracious music consumers, this new model is far more economical, even if it does create a fuzzy redefinition of what it means to "own" music--it feels like ownership until you stop subscribing and everything stored locally disappears.

In launching iTunes Radio, Apple isn't going the all-you-can stream route, but rather is layering a Pandora-style Internet radio product atop its digital music store. It's a smart move, considering the popularity of services like Pandora, whose 72.1 million active listers collectively listened to 1.35 billion hours of music in August 2013 alone. But unlike Pandora, iTunes Radio doesn't have to be profitable in and of itself, since it's a mere piece of the iTunes puzzle and its revenue generation is threefold: advertising, new iTunes Match sign-ups (the equivalent of a "pro" account for iTunes Radio users) and, of course, digital album and song sales. It's likely most valuable to Apple as a promotional vehicle for said sales, at least for now.

This could also be Apple's way of dipping its toes into the on-demand streaming music market and conditioning iOS users to turn to the "Music" app on their devices to stream music. After all, Apple did buy an on-demand service called Lala in 2009 and shut it down. Pieces of Lala's infrastructure went into building iTunes Match, but the code would be even better suited for a Spotify clone, not unlike the one Google just launched in May. Apple's chief rival now has its own digital music store, music-matching cloud service, Internet radio stations, and on-demand streaming service. As of today, the only thing Apple is missing from that list is the last item.

While the iTunes business--it includes apps, movies, TV shows, and e-books--remains strong, Apple knows the digital music download paradigm won't last forever. I, for one, haven't opened the Music app on my iPhone (or iTunes on my desktop, for that matter) since Spotify launched in the U.S. two years ago. I might start to if iTunes Radio is powered by a decent recommendation engine. And if Apple bolted on a worthwhile Spotify competitor, there would be little reason for iTunes users to even consider leaving the Music app, where the purchase button is always a tap--or fingerprint verification--away.

For Apple, every new gateway into its digital content ecosystem is worth building, especially as devices like the more affordable iPhone 5C help Apple grow in new markets like India, China, and the Middle East. As Tim Cook announced on stage this month, the company is on track to ship its 700 millionth iOS device any day now. With new iPhones launching in China for the first time, don't expect those numbers to slow anytime soon. With each new activation, Apple christens a new iTunes account and gains a new prospective customer for digital content. Before long, there will be 1 billion of them walking around with the storefront in their pocket and free, personalized Internet radio stations ready to lure them in the door.

What's In It For Listeners? (Besides More iTunes Bloat)

For users, the benefits of iTunes Radio are less apparent, especially those familiar with Pandora. It is, as U.K.-based radio futurologist James Cridland describes it, "a surprisingly me-too product from Apple."

iTunes Radio listeners will get a little more control over the variety of each station, an easy way to purchase the songs they like, and if early reviews are any indication, a pretty decent music recommendation engine (presumably based on Apple's proprietary music discovery technology). That's about it.

"Delivering personalized radio is a lot harder than it looks," says Pandora cofounder Tim Westergren. "Part of the appeal of Pandora is that for the consumer it's easy to use. It's deceptively easy compared to the technology that goes into making it work. It's a high bar to cross to let someone type in a single song or a single artist and then to nail it for them for hours and hours. It requires a lot of intellectual property, a lot of data. It's a big machine."

That intellectual property--the algorithm that fuels Pandora--is based on a sophisticated hybrid of human and machine intelligence that the company started building out in 2000 with the advent of the Human Genome Project. It started as an enormous map of musicological metadata hand-coded by professional musicians and has since evolved to include machine learning, collaborative filtering, and complex A/B experiments based on user behavior. For its part, Apple has fine-tuned its Genius recommendation methodology, but the underlying technology still can't match the granular, human-like smarts of what Pandora has built over the last 13 years.

By its very design, the data used to power iTunes Radio will start improving as soon as iOS 7 ships on September 18. That's because, like Pandora and others who borrow the thumbs up/down paradigm, iTunes Radio is going to start collecting new data points in the form of users tapping those thumb buttons, not to mention skipping, or most tellingly of all, purchasing songs and albums. Over time, these insights will strengthen Apple's music recommendation engine, which is presumably already privy to the day-to-day listening habits of hundreds of millions of users. Thankfully for Pandora, Apple's own algorithm will take time to progress.

In the meantime, bet on Pandora continuing to integrate its service into as many devices as possible. That includes not only smartphones and tablets, but cars and household appliances. By contrast, iTunes Radio will exist on desktops and iOS at launch. Since it's layered on top of the iTunes Store, it's hard to imagine Apple launching a version of iTunes Radio for Android or Windows Phone anytime soon. Thus, while its potential reach is inherently massive because it's baked into iOS, iTunes Radio will be invisible to hundreds of millions of Android users. And while those folks have Google Play's Internet radio stations pre-installed on their device, the service is still new and its recommendation technology isn't as thorough as Pandora's.

At launch, it's clear that iTunes Radio does more for Apple than it does for consumers. In time, that may change, but the first iteration doesn't offer anything we haven't seen before.

[Image: Flickr user Ephoz]

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9 Comments

  • billrosenblatt

    Wow, this is an amazing piece of rationalization. Apple releases a me-too, day-late-dollar-short product... on purpose!  What strategic genius!  

    Seriously, let's imagine if this product were released by, say, Microsoft -- what mountains of scorn these sheep, oops I mean journalists, would heap on it.  

    Sorry, this is yet more evidence that the innovation ship has sailed from Cupertino.

    And duh, of course it's commercial free... for now.  So was Pandora, for quite a while.  And so was Facebook. And so was YouTube. Etc.

  • William

    When I read this it was obvious that the author never used the program or even really knew much about it. Might not be a bad idea to wait until you can actually review the app before writing about it. just my opinion. That being said, I have used apple radio for the last two days and by far it makes apps like Pandora seem antiquated and just plain dificult to deal with. Not only does the Ar play songs I like 99% of the time, I have not been subject to the same droning voice of the allstate salesman every other song. The ads are far and few between and the music match is so much better than Pandora that this service has instantly jumped to the top of my favorite radio apps. Well done Apple, well done.

  • Billy

    This is going to kill Pandora pretty quickly. Why would an Apple device user need Pandora now? Why would new users even need to look for Pandora in the first place. I can delete the app and get rid of the ads. Personally, I have no interest in "discovering" new music, so it will be nice to have a setting to control that.

  • Ron Miller

    I've been using iRadio for a few weeks now, and I like it a lot better than Pandora. I haven't used Pandora since installing iOS7 beta (I'm a developer). The playlists are great, and since I pay the $25 per year for iTunes Match, there is no advertising.

  • John S. Wilson

    Me thinks Pandora is underestimating this by a lot. Apple has the benefit of mining the iTunes purchases (and genius playlists) of hundreds of millions of people to ascertain tastes and likes. Additionally Pandora is in a handful of countries while iTunes is in over 100 (though not all 100 will be available at the iTunes Radio launch). But the real kicker: at launch over 300 million people who have iOS 7 or Mac OS X will have iTunes Radio pretty much instantly. No app to download, no account to sign up for - just turn on and listen. 

  • Tim F.

    Pandora likes to tout its "algorithm" but it reveals its shallowness quickly now. Depth of original, non-repeat content is the key to successful music algorithms. I'm ready for some new competition from an old competitor.

  • Philbailey31

    I'm really excited for iTunes radio. I use pandora and I like it a lot. But the user interface is terrible and the ads are really annoying. iTunes radio looks really good and the featured stations look awesome. The guest dj stations look particularly awesome. I have already bought iTunes Match so I'm looking forward to having no ads!