Apples device penetration gives any new launch a great chance of success. If Apple has learned from Ping, then Spotify and Pandora should be worried. For advertisers, it redefines ‘radio’ and pushes it back into the heart of the media plan.

As is known, iTunes Radio, tipped to launch in September 2013, will be an integrated part of the on device iTunes experience. The new product will be built into the iOS software and will initially be available in the US only across iOS7 – compatible on iPhones 4+ and iPad 2+. It will not be available as a standalone app. It will use an algorithm to search users purchase history to create custom stations.

Why Spotify and Pandora should be worried
iTunes Radio seems an obvious attempt to compete with Spotify and more directly Pandora which, mainly due to copyright laws, also operates only in the US. However, Apple will no doubt be looking to expand; so how does iTunes Radio stack up against Spotify? In terms of libraries, iTunes wins with over 35 million songs in comparison to just 20 million on Spotify. iTunes Radio will be available free and on the go across tablet and iPhone, whilst Spotify Free is only available on desktop. iTunes Radio will be ad supported, just like Spotify Free, but whereas free listening on Spotify is capped after six months at 2.5 hours a week, iTunes radio will be unlimited. Perhaps the most crucial difference is like Pandora, but unlike Spotify, iTunes Radio has less user control as it doesn’t feature a search and play function – the goal is instead to get you to listen, like and buy tracks from the iTunes store based on an algorithmically created playlist.

iTunes Radio advertising opportunities will be similar to those on Spotify. Ads will be demographically targeted and will click through to an advertisers’ site. Targeting data will be taken from iTunes preferences and context (device, location, music genre, artist etc). At present there are no plans for a more in-depth offering like Spotify’s artist pages.

In recent years iTunes has run a successful paid video distribution channel, as the iTunes Radio product develops it will be interesting to see if a music video service is added, potentially adding YouTube to its list of competitors.

iTunes Radio: the more interesting proposition
Taking learnings from Ping, Apple’s failed social network play, iTunes Radio seems to be an environment in which, if it is easily possible, sharing will naturally occur.

The fact that all new Apple products will come with iTunes Radio already baked in will be a huge driver of traffic. In addition, the new product will be available via software update on all iPhone 4+ and iPad 2+ devices from launch. This will give iTunes Radio an instant potential audience of roughly 200 million users, making it a strong competitor for Spotify and Pandora. The new product does not currently compete with applications such as TuneIn and iHeartRadio, which allow users to access local Radio stations via their phone, but from an advertiser perspective, these types of radio applications do not offer custom mobile advertising solutions, mainly selling their inventory to networks.

So, iTunes Radio is a more interesting proposition.

The author, Eridani Baker, is a Digital Director at Mindshare Global

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