iRadio: Audio iAds coming with Apple’s expected music streaming service

apple musicWith Apple (possibly) gearing up to unveil its much-talked-about ‘iRadio’ music streaming service at next week’s Worldwide Developers Conference, news has emerged that the tech giant is set to serve up audio ads with its new offering.

The ads, which will play between each track, will help Apple to offer iRadio as a free service as it seeks to take on others in the music streaming space, including the current leader, Pandora.

An AdAge report Wednesday suggested the ads, set to be sold through Apple’s mobile iAd advertising network, could turn into a pretty decent revenue generator for the tech giant, thanks to iAd’s ability to target the ads.

iRadio’s service will reportedly include both audio and visual advertising and is expected to offer “highly targeted ads, which could make it pricey – but appealing – to marketers and a major threat to already-struggling Pandora,” AdAge’s John McDermott wrote in his piece.

As iRadio will be tightly integrated with iTunes, ads can be targeted based on the kind of apps, movies and TV shows a user has recently downloaded, plus if they’re using the service on their iPhone, location data could also be drawn upon.

With access to more user information than Pandora, which can only target ads based on gender, zip code and listening history, Apple can target ads more accurately and therefore charge more.

10 percent to music companies

The Wall Street Journal recently said Apple is set to pay music companies 10 percent of the revenue generated from iRadio’s ads, more than double the rate that rival service Pandora pays (4 percent) but significantly lower than the 70 percent it currently pays iOS developers with ads embedded in their apps.

However, as AdAge points out, iAd’s revenue still accounts for a tiny percentage of Apple’s overall income. This year iAd aims to pull in $213 million, while for the first three months of this year alone the tech giant reported revenue of $43.6 billion.

Recent news that music giant Warner had signed up to iRadio – following in the footsteps of Universal – has increased speculation that Apple is set to unveil the service at WWDC next week in San Francisco.

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