Today’s link brings some very interesting points in regards to how valuable iTunes Radio might be when iOS7 hits devices this fall. The Guardian’s Charles Arthur argues that the rate Apple is going to pay could potentially make the service very attractive to record labels.
It’s no secret record labels love and hate the team in Cupertino because of how iTunes affected music sales, but the viability of free streaming music gets harder to make money off of every year. That’s where the cash Apple has on hand comes in handy:
What the other streaming services have discovered repeatedly is that it’s hard to make such a service profitable, because the music costs don’t fall as they grow – in web terms, it doesn’t “scale”. Thus Spotify has put a 10-hours-per-month ceiling on free listening, and Pandora blocks people outside the US from listening.
So, while labels have been publicly supporting Spotify for some time, it will be difficult for labels to not throw their good stuff to Apple when they pay 10 times more.
Add to it the easy integration with iTunes to purchase what you are buying, and this looks to be an easy win for iOS. It’s crazy to think that the announcement was merely a footnote in the WWDC keynote presentation.