Apple To Enter The Music Streaming Arena

In an attempt to compete with music streaming services like Pandora, Apple could be trying its hand at one of its own. 

Yesterday, the Wall Street Journal reported that Apple has plans on expanding its musical prowess to include a streaming service similar to Pandora and Spotify. According to the Journal, the company is in negotiations with record labels for the rights to start developing the service as a pre-installed app. Making sure record labels are on board with the project is important because it has the potential to bypass issues Pandora and Spotify face. For example, skip limits or restrictions on how often a song by a particular artist is played. This would make the app more interactive and personal to each user.

Negotiations with record companies have just started, so this probably won't come up at next week's Apple event. 

Similar to Pandora, the app would create customized playlists based on a user's musical interest and iTunes purchases. It would be available on all devices, including MacBook computers. The app would be ad-supported but it's not clear whether the service would be free or not. 

Apple has over 400 million iTunes accounts, where Pandora has 150 million users. However, as Deadline points out, the amount Pandora has to pay for music rights takes up about 60% of its revenue. On the heels of this news, Pandora's shares have dropped 17% in early trading. 

Music streaming may seem like small potatoes to a big name like Apple, especially since Internet radio accounts for less than $1 billion a year. However, if the ability to purchase a song heard on the service straight through iTunes without interruption is included, it could be worthwhile. Despite that possibility, it is a gamble - what if users aren't responsive to yet another way to stream music and the service becomes another "Ping"?