Will Apple Or YouTube Take Over Pandora? Streaming Music Competition Heats Up

Streaming Music

Making money on streaming audio is all the rage. Whether it is a free service or a paid subscription, there are many services that offer music on multiple platforms. Users have many options with current providers, but there is not a single dominant service. Existing popular players Pandora, iHeartRadio and Rdio have some new competition in the process of being formed.

Google’s YouTube video service is a popular method for music, even though it is a video based site. Artists allow their music to be played and they are paid a portion of the ad based revenue that YouTube receives. Google purchased YouTube in 2006 and is now the world’s largest digital repository of streaming media. They plan on launching a streaming service later this year. Details are still a bit scarce, but a source did have the following statement.

“While we don’t comment on rumor or speculation, there are some content creators that think they would benefit from a subscription revenue stream in addition to ads, so we’re looking at that.”

YouTube will most likely offer a ‘freemium’ type of service. It will still have a free base offering, but a paid option will open more features and possibly an ad free version. Warner Music has been reported to be the first label to sign on with the search giants newest venture.

Google’s mobile rival is also getting into the streaming game. Apple has long been rumored to be getting involved, but the latest hang up is because of money. Per people familiar with the situation, Apple is requesting to pay record companies .06 per 100 songs streamed. To give you an idea of how little this is, Pandora pays .12 per 100 songs and Spotify pays .35 per 100 songs streamed.

Apple believes they can offer an existing extremely large customer base to record labels. The label executives appear to not agree and have balked at the initial offers. The streaming product was to initially launch with the iPhone 5, but it was not ready and with recent contract negotiations it obviously was not even close to meeting that goal. If record labels agree to anything less than what Pandora plays then it could start a storm of cost negotiations with existing services and label executives.

Pandora recently posted fourth quarter revenues and it rose 54 percent to $125.1 million. This was above the Wall Street analyst  expectations, but CEO Joseph Kennedy also announced he is stepping down. He took over in 2004 and has brought the company to an obvious all time high. Kennedy will maintain the role until a suitable replacement is found. Pandora is becoming a standard option in vehicles including Ford, GMC, Honda, Chevy, Lexus and Mercedes among others.

Their mobile app offerings have been extremely popular and compliment their web streaming service. Pandora was initially The Music Genome Project until it was renamed. The service was revolutionary in the way it recommended and chose what music to play based on listening interests.

Spotify became available in the US in 2011 and is still gaining ground stateside. Their model also offers the freemium setup. The free model relies on both visual and audio ads while premium service includes no adds and added features.

Rdio is another service that was started by the same duo that created Kazaa and Skype. They offer a free trial, but the service starts at $4.99 per month for unlimited plays on desktop computers. To get the service on mobile devices and desktops costs $9.99 per month. It also works on streaming devices like the Roku and Sonos products.

Lets not leave out Amazon who has a strong presence in the MP3 audio purchasing department. Combine that with their Android market presence and the popular Kindle tablet lines and you have potential for another huge player to enter the cluttered playing field. Will Facebook finally throw their hat into the mix to counter the Myspace comeback? Of course there are countless other services that are smaller or lesser known, but these are a few of the top candidates.

What service will end up pulling ahead? That’s an unknown, but plenty of people think Apple could enter the market place and dominate from the start if their pricing is aggressive. Others feel Google has the advantage with YouTube and adding a streaming music service will only add to their success. What do you use and do any of the other services interest you?

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