Apple Inc., planning to unveil a music-streaming service next week, is revamping how it sells mobile advertising to cater to businesses eager to reach customers as they listen to songs.
Engineers and sales staff in Apple’s iAd business have been charged with supporting the new digital-radio service, which the company plans to debut as early as Monday at its annual developers conference.
The music service won’t be publicly available until later this year, when Apple’s iOS 7 mobile-operating system is released.
Apple Chief Executive Officer Tim Cook is shifting how the company courts advertisers after failing to make much headway against Google Inc. in the $4.11 billion U.S. mobile ad market. Apple will seek to land big brands for the new streaming-radio service — akin to Pandora Media Inc.’s business model. It will scale back its role as a network that places marketing messages in mobile software from its App Store.
Apple has been negotiating with advertising companies including Omnicom Group Inc.’s OMD to secure brands that will run campaigns on the radio service.
People with knowledge of the plans declined to be named since the plans are not public. Trudy Muller, a spokeswoman for Apple, declined to comment.
Apple’s iAd distributes ads to third-party developers who use it to make money from their programs sold in Apple’s App Store. Ads can be targeted to users based on what software applications, music, movies and books a customer has downloaded from the App Store and iTunes for use on their iPhones, iPads and iPods.
Still, the iAd network has had trouble wooing and keeping marquee brands because it doesn’t provide companies as much control about which apps will run their ads; it can cost more than rival services, and the ads are only carried within apps on Apple’s family of mobile products.
Apple intends to make its new radio service free to users and supported by advertising, similar to how Pandora’s mobile app works. The new service will be different from Apple’s iTunes in that the songs played won’t be limited to what a user has purchased, and listeners won’t own the songs they stream for free.
Apple’s music service will stream songs based on a user’s tastes. Like Pandora, a station can be created based on a particular song or artist, and the program will then play other songs based on those preferences. It will be tightly integrated with iTunes, so a person can easily download a song they hear that they want to buy.