A Pandora killer? Apple rumored to be considering a new ad-based music service

PandoraShares of Pandora slumped today after Bloomberg News reported that Apple plans to launch a new ad-based online music service early next year. Pandora fell more than 11 percent, with trading halted at one point.

Bloomberg notes that a deal could be hammered out next month, with talks revolving around how ad revenues would be shared.

A new music offering also could be a threat to Rhapsody, the Seattle-based subscription music service, and to Microsoft’s Xbox unit, which also offers music.

“We really don’t have a dog in this fight — full on-demand streaming is a different value proposition than Internet radio,” notes Rhasody spokeswoman Jaimee Minney. “In speaking with our customers, we find they use a variety of applications and services to fulfill their music appetites, and that for many Pandora is the amuse-bouche for Rhapsody. That said, we think radio is important and it is an area of our business that we are focused on further developing and improving.”

Bloomberg notes:

“The advertising initiative is part of broader flexibility Apple Chief Executive Officer Tim Cook is giving the company’s mobile advertising group to lure new business and integrate ads with other Apple services, according to people familiar with the matter.”

Oakland-based Pandora boasted 1.15 billion listener hours during the month of September, up 67 percent over the same month last year. It also had 58.3 million active listeners for the month.

  • Guest

    Yawn. I speak for the entire Internet when I say that the cocktail one can mix with Rhapsody, Spotify, Pandora, and Amazon services is potent enough for everyone. The world needs an Apple music service like it needed an Apple social network.

    Tim, please reconsider. Apple Radio would be a catastrophic waste of money.