Sony Could Delay Apple's iRadio Launch
Next month, thousands of tech industry professionals will head to California for two conferences: the Electronic Entertainment Expo in Los Angeles and the World Wide Developers Conference in San Francisco.
The latter is Apple's (NASDAQ: AAPL) annual event where the Mac maker introduces new software and other enticing tidbits as app developers listen intently. This year Apple hopes to make at least one major announcement, but it seems that a potential partner could hold things up.
According to the New York Post, Apple has been planning to build a new music streaming service for quite some time. Now that the company has reportedly convinced Universal Music and Warner Music Group to come board, Apple is finally ready to launch. There is just one problem: Sony (NYSE: SNE) is not yet sold on the deal.
This has frustrated Warner and Universal, who are said to be very eager to start profiting from Apple's new service.
"There's a frustration," one unnamed senior music executive told the New York Post. "[The Apple streaming service] is a net positive for the business. Apple is offering a 50/50 ad revenue share, minimum guarantees and royalties and the most successful ecosystem that's ever been created. Unlike Pandora (NYSE: P), the up-sell opportunity is enormous."
If Apple merges its streaming service with iTunes (as the company is expected to do), it would automatically reach more users than any of its competitors. It would also provide Apple with the "enormous" up-sell opportunity that the unidentified music exec mentioned.
While listening to "Little Talks" by Of Monsters and Men, for example, users could be shown "buy now" images for the single and the full album. This could potentially entice users to buy the song or full CD they are listening to, especially if iRadio (the rumored name) is not an on-demand service.
The challenge in producing an online radio service is that many users prefer to pick what they play. There are several paid monthly services that offer that option, including a brand-new one from Google (NASDAQ: GOOG).
For those who don't want to pay, Spotify offers a freebie option that allows users to stream as much as they want. MySpace offers the same thing, albeit with fewer options. But the site's new layout makes it very easy to search for music.
While it is essential for Apple to sign with Sony before it launches its new service, that might not be enough to ensure the company is successful. If it wants to grow rapidly, Apple will need unique features and/or a price that's lower than its competitors.
Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ
(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.