WWDC Update: iRadio To Be Free... With iAds

Apple reportedly plans to make its pending iRadio streaming music service free for users — in part by redirecting its moribund iAd mobile-advertising platform to support it, Bloomberg's Adam Satariano reports. Citing multiple unnamed sources, Satariano writes that Apple is seeking "big brands" to purchase iAds in support of iRadio.

The long-envisioned iRadio service — which might not even be called that — remains something of a mystery. Apple could offer iRadio as an "on demand" streaming service a la Spotify or Rdio, or as a quasi-personalized digital radio service like Pandora, or as some variation on either model — or both.

However it turns out, it will be Apple's first service to offer users access to music beyond their personal collection. Apple's iTunes Store currently sells music by the track and album, and it $25-a-year iTunes Match service lets users stream their own digital music to their Macs and iOS devices from Apple's servers. iRadio will instead stream unlimited music for free, relying on ad dollars for revenue. 

And that's where iAd comes in. Once a much-ballyhooed alternative to Google's mobile ads, iAd has instead struggled. In Bloomberg's telling, that's largely because of high costs, limited distribution (it only placed ads in apps sold through Apple's App Store) and the fact that Apple didn't offer advertisers much control over where their ads would run.

Leveraging You For Better Advertising

It's not exactly clear how things will be different with iRadio, but presumably Apple has big plans in that regard.

One big difference could be that, with 500 million iTunes accounts already registered, Apple has plenty of consumer data — including personal information and purchase history across music, video, apps and ebooks — to leverage in the name of targeted advertising.

(See Also: Apple Quietly Launches New iPod Touch, Claims 100M Units Sold To Date)

This past weekend Apple reportedly signed the second of three major music labels it hopes to bring aboard for the iRadio launch, which Satariano's sources say Apple is targeting for the Worldwide Developers Conference keynote address Monday. iRadio would then roll out to consumers alongside the iOS 7 mobile operating system later this year.

Exchange Rates

Another intriguing possibility is that Apple launch an ad exchange inside of the iAd infrastructure, according to an anonymous advertising executive Business Insider claims to have spoken to. An Apple exchange would compete more directly with Google and other services across the Web and mobile universe, letting advertisers track users of Apple devices and bid to serve them targeted ads as they navigate various online properties.

Todd Teresi, a former Adobe executive who now heads iAd sales, is reportedly lobbying for Apple to launch an ad exchange. Google (via the DoubleClick acquisition) and Facebook both run high-profile ad exchanges, and Twitter is rumored to be prepping an exchange of its own.

(See also: Apple Comes Out Swinging In Its E-Book Antitrust Trial)

Either iAd development would mark a notable shift from Steve Jobs' original vision for iAd as a way for third party developers to make money. Originally intended to drive ad sales inside of iOS applications, iAd debuted with roughly one fourth of 2010's global mobile ad spend in pocket courtesy of some big-name launch partners.

By contrast, iAd claims just 15% of today's $1.7 billion market, according to research firm IDC. Google leads all mobile advertising companies with a 24% share.

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