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Pandora in the Crosshairs as Apple Boosts iTunes Radio

Apple senior vice president and music honcho Eddy Cue. Photo by Bloomberg.
Apple senior vice president and music honcho Eddy Cue. Photo by Bloomberg.

As the online music world focuses on Apple’s acquisition of Beats Electronics, a series of new initiatives at Apple’s iTunes Radio service could also have a significant impact on the digital music business and especially the market leader, Pandora Media.

In a move that strikes at the heart of Pandora’s advertising business, iTunes Radio is expected to enable locally targeted advertising later this year, according to ad buyers who have spoken to Apple. Apple may begin promoting iTunes with “house ads” on its iAd mobile advertising network, an unusual move for the company.

Apple is also looking to work with erstwhile rivals—broadcast radio stations—in order to increase the volume of content on its service.

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More than 90% of American adults still listen to the radio every week, according to eMarketer, and broadcast radio advertising has remained steady, at just over $15 billion. It has mirrored the stability in the TV ad market, which also faces a plethora of Web-based upstarts. Much like the digital video ad market, the digital radio market has grown rapidly, by more than 25% annually, but doesn’t appear as if it will cause broadcast budgets to drop anytime soon. Last year, digital radio in the U.S. pulled in $1.65 billion, up from $1.31 billion, eMarketer said. This year, revenue is expected to reach $2 billion.

This story has been updated to clarify that iHeartRadio is a network of sites and apps.


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While Pandora offers advertisers data about its users’ age, gender and zip code, plus other information about their music preferences, Apple has information about users’ iTunes purchase history and software downloads.

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