Apple is also expected to unveil a redesigned iOS 7 mobile operating system with a "flatter" design and new MacBooks. Meanwhile, a hot new development house has released a note-taking app with a flat design thought to resemble the new OS. And there are also reports that Apple plans to update its Airport Extreme and Time Capsule routers with faster wireless connectivity.

ReadWrite will have live coverage of the WWDC Keynote beginning at 10 AM Pacific, this Monday June 10.

(See also WWDC Update: iRadio Signs Warner Music, Official App Hints At Flat iOS 7, New Macbook Pro Rumors.)

Launching Monday, Available This Fall

iRadio, as reports have dubbed it, is thought to be a personalized online radio service that will be free to users, subsidized by advertising. Though an announcement may well be imminent, the service isn't expected to be available to users until later this year, likely as part of Apple's iOS 7 rollout in late Summer/early Fall.

Reports over the last week pegged Universal Music and Warner Music as having signed on to iRadio, leaving Sony as the sole holdout Apple CEO Tim Cook wanted inked to the service ahead of any launch announcement. Apple has also already pivoted its iAd service to sign "big brand" advertisers to advertise on its new digital music service, which may be integrated into existing iTunes software or launch as a standalone software for mobile and desktop devices. Shares of would-be competitor Pandora fell 8% Monday on news that Apple had inked the Universal and Warner deals.

(See aso iRadio To Be Free Free... With iAds.)

Gruber's Flat App, Refreshed Routers

Q Branch, a new iOS development house that counts noted Apple-centric blogger John Gruber amongst its co-founders, launched note-taking app Vesper yesterday. The app is notable in that it features a "flat" user interface design in line with the new visual direction Apple is said to be taking for iOS 7. Vesper generally eschews drop shadows and textures for a more minimalist design, as does Apple's official WWDC conference app, adding fuel to the speculation surrounding the rumored iOS 7 design overhaul thought to be coming Monday.

9to5Mac is reporting that Apple may also be prepping refreshes of its Airport Extreme and Time Capsule network routers for launch Monday. The report cites newly leaked SKU and pricing information that matches up with similar info for the current Airport Extreme and Time Capsule products, which are said to be in low supply. Both products would be upgraded to support the 802.11ac wireless networking standard, which supports faster Wi-Fi connections than do current versions of the devices. An earlier 9to5Mac report suggested that refreshed MacBooks with 802.11ac support will also be unveiled Monday. 

(See Also Expectations Lowered For Apple's Big Developers Conference - WWDC - In 2013.)

Image by Scott Schiller via Flickr.

(See also Expectations Lowered For Apple's Big Developers Conference - WWDC.)

On Monday, meanwhile, the company released the official WWDC app for iOS devices, which features a slightly "flattened" design that's heavy on black and white and light on textures and shadows. The app's design lends credence to rumors that iOS 7 will move away from skeuomorphic design trends toward a simpler flat appearance. (A skeuomoprhic design mimics real-world materials - for example, the virtual leather grain binding in the current iCal app.)

(See also Forget Skeuomorphism: The (Digital) World Is Getting Flatter.)

Apple has already announced it will preview the next generations of its iOS and OS X operating systems at the conference. The company is also rumored to be working on refreshed MacBook Pro laptops, possibly featuring Intel's new 'Haswell' processors, for launch during the keynote address June 10 in San Francisco.

Lining Up The Big Three For iRadio

On the streaming music front, Apple inked a licensing deal with Universal Music last month, and is still negotiating with Sony, presumably to have all three of the music industry's largest companies on board for a WWDC iRadio launch. While the Universal deal covers only recorded music, the Warner agreement is said to span recordings and publishing rights, and Apple is reportedly in talks with both arms of Sony's music business. Sources for both CNET and The New York Times have said that Apple will be paying per-stream and royalty rates at least on par with, if not higher than, what Pandora pays music companies in its licensing arrangements.

Perhaps the most popular of current internet radio services, Pandora counts some 70 million active users. Apple, meanwhile, has registered more than 500 million iTunes accounts. Apple reportedly tried to leverage its massive user base to negotiate cheaper licensing arrangements than Pandora's, but the music labels balked. Reports say that Apple plans to build advertising into its radio service in order to drive additional revenues - which will be shared with the music companies.

(See Also: Tim Cook on Apple's 'Very Grand' Vision for TV, Wearable Tech & Much More) 

Thinner 13" MacBook Pro?

Noted Apple analyst Ming-Chi Kuo of KGI Securities has published his forecast for WWDC, highlighting expectations of a refreshed 13-inch MacBook Pro with retina display. According to a 9to5Mac report, Kuo expects the updated model to feature Intel's new Haswell chips in a slightly slimmer industrial design with an upgraded 1080p resolution webcam. The current 15-inch MacBook Pro retina is actually a bit slimmer than its little brother; it could be that Apple is prepping a  13-inch model that matches the thickness of the current 15-inch machine.

Kuo also predicts a refresh to the MacBook Air line using the dual-microphone setup employed by the current MacBook Pros. The two-microphone array allows for advanced noise cancellation techniques to enhance FaceTime calls and other voice applications. Better voice recognition would, of course, be key to incorporating the voice-activated Siri service, should Apple choose to bring such functionality to the Mac. 

Stay tuned to ReadWrite for the latest on what to expect at Apple's WWDC. 

WWDC app acreenshots via iTunes.com.

Google Play Music All Access will offer on-demand access to millions of songs for $9.99 per month, which is the same as every other music subscription service's premium tier. Unlike the existing market leaders, though, All Access won't include a free tier of access, a fact originally reported by the New York Times.

All Access will include "millions" — Google didn't say how many — of songs within 22 genres, a Google-powered recommendation engine, Pandora-style radio stations, editor-curated playlists and the ability to blend your own library with Google's. 

At first glance, it's a pretty compelling offering. If you sign up before the end of June, it will cost $7.99 per month. And that's just the first competitive advantage Google has over the incumbents. 

Google Is Already A Streaming Music Giant

Spotify is virtually synonymous with streaming music, but it's worth noting that Google is already plays a massive role in the discovery and consumption of music. These days, when teenagers want to hear a new song, they don't turn on the radio or buy a CD. They go to YouTube.

That's because the Internet's biggest repository of videos also happens to host millions of songs, which are readily available to stream for free. It's the world's biggest accidental music streaming service. 

With All Access, Google is making a far more official foray into  the streaming music space, having recently signed licensing deals with all three major labels in the U.S. It's not linked directly to YouTube and its massive repository of free music, but rumor has it that the video giant could get its own paid subscriptions for on-demand music. In the meantime, All Access is another attractive gateway into Google's content ecosystem, which hosts a hell of a lot of music. 

Google's Biggest Advantage: Being Google

The only reason we're talking about this new music service is because of who made it. By virtue of being a Google product, All Access has the potential for massive cross-promotion throughout Google's array of popular Web services.

More important, All Access will be built directly into the world's most popular mobile operating system. That's where the magic of streaming music really lies: In our ability to take it with us. It's why Spotify, Rdio and MOG all wager that the simple ability to access all that music on our phone is enough to convince people to shell out $10 per month. Spotify has done a decent job of proving that thesis by amassing 6 million paid subscribers at an impressive 25% conversion rate. 

Of course, Spotify, like Rdio and the rest of its competitors, has to compete for users' attention via app store rankings, social integrations and plain old marketing. All Access, by contrast will be much more front-and-center within the Android ecosystem. That's huge.

Who Needs A Business Model? 

Another advantage of being a Google product is that All Access won't have quite as much pressure to make money. Spotify and Rdio will ultimately need to find a way to profitability (or get acquired by a giant), something that isn't easy under the current economics of the streaming music business.

A company like Spotify will have to find a way to minimize its enormous music licensing costs, which are easily its biggest expense. Google's entrance into this space might make that harder, since the company can afford to pay out huge sums without investors holding the profitability gun to its head. 

Spotify and Rdio's other biggest challenge is converting paid subscribers. The streaming model, the theory goes, will work much better when there are many millions of people paying for services like this.

So far, Spotify has done the best job of converting those free listeners to paying subscribers. But with a competitively price competing service now shipping on hundreds of millions of handsets, the incumbents may have to get much more creative about courting subscribers. 

In a recent interview on WYNC's On the Media, technology journalist Tim Carmody suggested that this might be how the streaming music business will work:

Probably the most likely thing that will happen is that someone, whether it's an Apple or a Google or an Amazon or a Sony, comes along and essentially agrees that we’re gonna run music at a loss and we’re going to support it with these other businesses. How do you make money on the music business? Don't make money on the music business. That's the answer to that question.

That may well turn out to be true, but it's probably not quite what Spotify, Rdio and their ilk had in mind. 

All Access: Merge Your Library With Google's 

Last week, I wrote that as good as Spotify and Rdio both are, neither is perfect. Spotify's user experience could be better, while Rdio doesn't let its users upload or merge their own music. What I described as the ultimate streaming service would need to nail both design and music selection, at the very least. From the Google I/O stage, the All Access interface certainly looked nice, although I have yet to get my hands on it to try it out.  

The second part of that equation — the ability merge one's own library with a cloud-based repository of music - appears to be a feature that All Access subscribers will indeed enjoy. By launching alongside the Google Music cyberlocker first unveiled in 2011, All Access effectively allows users to blur the line between Google's library of licensed music and their own collection of tunes. 

One detail that was glossed over at Google I/O was exactly how wide of a selection All Access users will have. Rdio and Spotify both have about 20 million tracks in their libraries, which includes not just the major labels, but a partnership with indie label rights body Merlin and countless smaller labels. How many tracks does All Access have? The Google Music integration makes that question a little less crucial, but more casual listeners without hard drives full of MP3s will want to know when they're eyeing up $10 music services. 

Related Stories

• Why Google's Rumored Spotify-Killer Makes Perfect Sense
• 6 Million People Pay For Spotify - Is That Good Enough? 
• Next Round In The Google-Amazon Death Match: Streaming Music
• The Ultimate Streaming Music Service: Just Merge Rdio and Spotify

Images by Nick Statt for ReadWrite

While Google hasn't commented, according to the reports Google has already struck licensing deals with Universal Music Group and Sony Music Entertainment - it already has a deal with Warner Music Group. 

No word on pricing yet, but the Times said that there would be no "free" tier of service. The new service is expected to be accessed via the Google Play store for Android devices, but Google is also said to be working on a streaming-music product for its YouTube division. 

Details are expected to be announced at the Google I/O keynote on Wednesday. 

The answer isn't hard: Just merge Spotify and Rdio. Alternatively, the two sites should just copiously steal features from one another. Or someone could found a new service that blends the best of both. Whatever. I want the best of both, and I want it now.

Allow me to explain. Almost two years ago, when Spotify finally launched in the U.S., I signed up. Within 48 hours, I had canceled my Rdio subscription and agreed to pay Spotify $10 per month to access its service on my phone, ad-free. 

(See Also: How To Choose The Right Music Subscription Service)

But for the last few weeks, I've had the luxury of using a premium Rdio demo account, and I've gotta say: It's sometimes tempting to switch back. As impressive as Spotify is, Rdio is much, much better designed. On the other hand, Spotify has a few excellent features Rdio lacks. (Both sites offer approximately the same amount of music, which is often available via high-quality 320 kbps streams.)

Frankly, I'm torn. But I'd rather not have to choose at all. I suspect many other music fans — whether they know it or not — feel the same way.

What Rdio Gets Right: Design and Music Management

When it comes to design, Rdio wins, hands down. Spotify's apps aren't terrible, but Rdio sports what feels like a cleaner, more minimalist design. The blue and white color scheme is more refreshing and it feels like the company put some thought into typography. 

More importantly, Rdio organizes your music much, much better than Spotify does. It has long blown my mind that Spotify refuses to display your music library in a way that's at all analogous to how you'd organize music in real life. There's no collection. There is no "Albums" tab.  It's just playlists, starred tracks and search. If I find a new album I want to routinely listen to, I have to star the whole thing or add it as a playlist. It's bizarre. 

By contrast, Rdio lets me easily add albums to what is intuitively labeled my "Collection," which is organized by artist. To anybody who's ever used an iPod, scrolling through a list of artists is an familiar, almost expected interface. Spotify users, for whatever reason, don't have this simple luxury. 

Rdio's built-in music discovery is also superior. The "Heavy Rotation" tab recommends music to me based on what I listen to and who I follow on Rdio. Depending on those two details (especially who one chooses to follow), the suggestions can actually be pretty spot-on. I don't know what powers the "Recommended Albums" carousel in Spotify's "What's New" tab, but the fact that it thinks I'd enjoy Kelly Clarkson's new album suggests it's not paying very much attention.

What Spotify Gets Right: Add-On Apps & Infinite Music

What Spotify lacks in native recommendation features it makes up for via third party add-ons available through its built-in app platform. Spotify might not be aware of what I actually like, but Last.fm is — and its Spotify app is a mere click away. If I want music to match my mood, there's MoodAgent, which builds playlists based on things like tempo and the emotional qualities of a given song. 

For less robotic, more human-curated recommendations, there are apps like Hype Machine and Shuffler.fm, both of which corral the best new stuff from influential music blogs, broken down by genre. Then there are good, old-fashioned hand-picked recommendations from individual critics via the Rolling Stone, Guardian, Pitchfork or NME apps. 

Spotify's third party app platform is by far its most promising feature, aside from the music itself. Realizing that it can't build the end-all, be-all music service for every listener, Spotify has smartly opened up its platform to developers, who can use HTML5 and related Web technologies to build applications that plug into Spotify's vast music library.

These add-ons have yet to find their way into Spotify's mobile apps, but they continue to push the desktop experience forward in a way that makes it hard to break the Spotify habit. 

And Another Spotify Win: Imports

The other chief advantage Spotify offers — and that Rdio and others should just steal outright — is the ability to import your own MP3 collection into the service. This is a huge perk.

No matter how many licensing deals these companies strike, their music libraries are never going to include everything. There will always be big-name holdouts like The Beatles and Led Zeppelin, not to mention a score of smaller, independent artists who either haven't done the leg work to get their music onto streaming services or simply don't want to. 

Allowing users to effectively merge their personal music collections with Spotify's music library makes for an experience that feels more comprehensive and focused. As more of our music consumption moves online, the listening experience inevitably becomes fractured across sites and apps. We might not be able to avoid this entirely, but Spotify's integrated approach makes it easier to at least minimize the problem.  

There are, as always, technical limitations to implementing this feature. Since Spotify primarily exists as a desktop app, it can easily scan your hard drive for music tracks and index them, iTunes-style. The alternative would be to allow users to upload their tracks directly to the service, a la Google Music and the Amazon Cloud Player.

Waiting for thousands of songs to upload doesn't present the most compelling user experience, but it is one possible technical solution. For the most part, Spotify's local indexing approach works pretty well. 

Rdio has desktop apps, but they're more or less a clone of its Web interface without much extra functionality tacked on. If Rdio were to include the ability to import and manage music, I'd be that much closer to ditching Spotify. The desktop app is also a crucial component to syncing local MP3s to users' phones and tablets, another feature unique to Spotify in the U.S. (Deezer does this, too). 

Toward The Ultimate Streaming Service

Music is a pretty personal thing. If these companies want us to shift our listening habits into their respective clouds, they need to be particularly sensitive to what works for users. I've presented one framework here. Perhaps you have your own ideas, which I encourage you to leave in the comments. A flawlessly-designed, super-comprehensive, extensible and flexible music subscription service would be well worth the money. 

It's a little frustrating, because Spotify and Rdio collectively have most of the pieces required to build the ultimate streaming service. It's almost as if the two could merge and we'd be set. It'd be unlikely, but if this new hybrid music dream service could steal a page from Tomahawk's playbook and integrate additional music sources like SoundCloud and YouTube, it'd be even better. 

Whether or not Rdio, Spotify or any of its current direct competitors deliver this mythical dream service, somebody will. The music subscription space is going to heat up substantially this year, as Google and Amazon are both rumored to be entering this market. Meanwhile, MOG will be reborn as Daisy and Deezer is expected to launch in the U.S. 

We already have a few very awesome, yet imperfect music subscription services. As the space gets more crowded, there exists a real opportunity to launch something truly, thoroughly compelling. Who will it be? 

In the meantime, there are already a number of music subscription services to choose from, depending on where you live. None of them are perfect. Spotify and Rdio generally the lead the pack, each with its own impressively massive library of music. Spotify wins points over Rdio for letting you import your own MP3s, whereas Rdio's interface design, especially on mobile, is vastly superior to that of any other offering.

Then there are solid offerings from Grooveshark and MOG, both of which face an uncertain future, for completely different reasons. MOG was acquired by headphone maker Beats Audio, which plans to launch a new service called Daisy this year. Meanwhile, Grooveshark has faced a barrage of lawsuits from record labels, who accuse the startup of copyright infringement, but remains standing... for now.

Which service is right for you? It depends on how much you value things like audio control, design aesthetics, music selection and user control. 

A year from now, the landscape may well look totally different and we'll be updating this post accordingly. For now, here's a comparison of the major all-you-can-stream music services. 

Spotify

Rdio

Deezer

Rhapsody

Grooveshark

MOG

First and foremost, Twitter #Music is undoubtedly good for Twitter. The app takes something that is hugely popular among consumers — music — and intimately ties it to its own service. It also integrates with Spotify and Rdio so tracks can be streamed in their entirety from within Twitter #Music. That feature, the company is betting, will keep listeners glued to the app, where much of what they do is tied to Twitter's core functionality: tweeting songs and following artists. 

Putting Artists Front and Center 

For artists, the potential advantages here are huge. At every turn, Twitter #Music encourages you to follow bands and musicians, which of course can lead to longterm engagement and even sales. Whether they're already trending or Twitter thinks you might like them (based on your existing follows), this app puts artists and their Twitter handles front-and-center, never missing an opportunity to stick a "follow" button in front of the user. 

Twitter #Music also lets users buy tracks directly from iTunes, which is a major plus for artists who still aren't making all that much money from those Spotify and Rdio streams. 

If widely adopted, Twitter #Music could become a potent source of exposure for up-and-coming musicians. And while there a million services that promise to enable music discovery, seldom do they directly make money for artists. 

We Are Hunted, R.I.P.

Twitter #Music is built on top of the guts of We Are Hunted, a service that ranked the popularity of online music so effectively that some people wondered whether it could replace Billboard. Twitter gobbled it up to build this, and you can tell. Twitter #Music's design is strongly reminiscent of We Are Hunted's, even if Twitter appear to have gutted much of the service's original functionality. 

We Are Hunted's flagship feature was its Emerging Music chart, which analyzed a wide range of data signals to determine what music was most popular online. Twitter #Music appears to replace that more complex algorithm with something that more heavily favors Twitter's own data. That's not surprising, but it makes for a less thorough analysis and for music fans, a less useful experience. 

In the process of launching this new product, Twitter also appears to have gutted some of We Are Hunted's core recommendation technology in favor of a more Twitter-centric approach. Whereas We Are Hunted used a complex array of data to associate artist to one another, Twitter #Music appears to be relying heavily (if not exclusively) on data about the relationship between artists on the service, such as who follows who.  When I look at The Flaming Lips on Twitter's new service, it recommends Taylor Swift. Really? 

Do We Need This? 

With We Are Hunted effectively neutered and Twitter entering the digital music space with a big splash, the big question remains: How useful is this new app for users? 

It depends. Let's consider Twitter #Music's key selling points: You can discover music that's popular on Twitter, get new music recommendations and listen to it all within the app. Those are all useful things, although to varying degrees. 

The music-listening part is only really worthwhile to those of us who pay for premium Spotify or Rdio accounts. Otherwise, we're left with a mere iTunes snippet and the option to buy the whole track. And if you do have Rdio or Spotify, you're going to continue to use those services' apps for the majority of your listening. Listening to music isn't the main draw of Twitter #Music, just a very nice touch. 

The most compelling aspect of the app is Twitter's data about artists, songs and the social relationships between them. If you can get over the fact that We Are Hunted pulled in much more data and was thus much more interesting, this is useful, especially if you happen to be active on Twitter.

Where Twitter-Based Music Discovery Fails

But just being a voracious tweeter isn't enough. As many users have pointed out, the "Me" and "Suggested" tabs of the app are of limited value if you don't follow a lot of musicians on Twitter. Indeed, using Twitter follows as a barometer for one's music taste is a curious choice. Sometimes musicians have worthwhile Twitter accounts, sometimes not.

Either way, most people probably don't follow all the artists they like. Unlike the Facebook "like", the Twitter "follow" is not an explicit statement saying "I enjoy listening to this band." Instead, it's saying, "I think this band, whose music I happen to enjoy, might have interesting things to say, so I'm listening."

Of course, if you're not following a lot of artists, that's something Twitter #Music is explicitly designed to change. But out of the box, this is a real handicap for some users.

It's also worth mentioning that at launch, Twitter #Music only appears to acknowledge verified artist accounts, at least as far as the "Me" tab is concerned. When I click on my own profile, it shows eight bands that I follow. There are certainly more artists that I follow, but they're less well-known and thus have no official designation from Twitter. As a result, they are presumably not factored into my recommendations. 

Personally, I'm not all that interested in what music is generally popular on Twitter. You mean to tell me that lots of people are listening to Psy, P!nk and Maroon 5? No kidding! The "Emerging" tab is a bit more interesting, as this is where a hidden gem or two is bound to surface. 

The other tabs are more personalized, and thus likely to be more relevant to users. It's not clear exactly what kind of data is fueling he "Suggested" tab, but it does a reasonably decent job of recommending artists. Many of its suggestions are spot-on. Some are questionable. It's not terrible, but it could be better. I've tested a lot of services that utilize music recommendation engines.

For my money, algorithms like the ones behind Pandora, Last.fm and the Echo Nest do a much better job of making music suggestions than this app does. Twitter #Music is also competing against beloved and impressive music recommendation apps like Shuffler.fm and Hype Machine. 

On the whole, Twitter #Music is a decent app. If you like music enough to subscribe to a streaming service and are interested in finding new music, this is a pretty good, social-fueled way to do it. If your tastes are more particular and nuanced, tools with more complex algorithms and granular data points are likely to be more useful to you. Either way, it's worth taking it for a spin.

The rise of all-you-can-stream services like Spotify have made some artists nervous about the model's potential impact on music sales. It's why bands like Coldplay have delayed the arrival of new albums on Spotify and others, like the Beatles and AC/DC, are holding out all together. Logically, it makes sense: If you make your music available to stream for free, people are less likely to buy it.

Right? Not always.

Ahead of its release on March 19, Justin Timberlake's new album The 20/20 Experience was streaming in its entirety not just on Spotify and Rdio, but at the iTunes store itself. Anybody who wanted to could quickly and legally access the album for a week. Then it was released. And it became the most pre-ordered album in iTunes history, surging past his record label's sales expectations by 63%.  

It's good news not just for Timberlake himself, but for the music subscription model that he plans to embrace when MySpace — of which he is part owner — launches its own service later this year.  MySpace will join Google, Amazon, Beats and God knows who else in entering the digital music subscription market in 2013. 

Timberlake's experience would seem to debunk the thesis that streaming can't support artists and thus isn't in their best interests. Indeed, his success will likely make him a poster child for the music subscription revolution as the industry marches toward a future in which music is rented more than it's owned. 

Music Subscription Services: Not a Silver Bullet

But hold on a second. For one thing, we're not all Justin Timberlake. The pop megastar released his first solo album over a decade ago, after years of global success as a member of a massively popular boy band. In the same way that Radiohead's 2007 experiment in "pay-what-you-want" record sales didn't create a new model that worked for everybody, artists can't necessarily look to Timberlake for cues about where their careers might be headed. 

It's also worth noting that streaming alone wasn't enough to constitute "success" in this case: Selling individual copies is still the ticket to revenue and publicity for artists. Timberlake's new album quickly became one of the most streamed records on Spotify, but that's not what everybody's talking about. It's the sales numbers. That's where the lion's share of the revenue for this record is going to come from. 

What The 20/20 Experience launch does show is that subscription services, while not ready to replace paid downloads as a revenue stream for the industry, can be a critical tool for marketing and ultimately driving sales. In time, the revenue available to streaming services may reach more sustainable levels. In the meantime, it's nice to know the artists who embrace them aren't shooting themselves in the foot by doing so. 

Streaming may have promise, but it's no silver bullet. The music market's digital future is going to be a hybrid of approaches, some of which will work better than others in particular circumstances. Timberlake's success is interesting — meaningful, even — but the way forward still isn't a simple one.

Photo via Flickr user Edward Kustoff, CC 2.0

News that Amazon is in negotiations with music labels comes mere weeks after Google was revealed to be having similar discussions of its own. The search giant already has a huge presence in digital music thanks to YouTube, but seeks to solidify its role by launching a Spotify-style subscription service on top of its existing music products.  Like Google, Amazon already has content relationships and infrastructure in place that will simplify the process of entering what is typically a very challenging and cost-prohibitive marketplace.

It will still be an expensive endeavor, given the high cost of licensing music from the major labels, but companies like Google and Amazon are well-positioned to negotiate those dollar figures down and, if necessary, operate at a loss without discernibly denting their bottom line. 

Fine-tuning the financial details is what these negotiations are all about. And it's important to note that they are just that: negotiations. They could wind up hitting a roadblock, as has allegedly happened with Apple in its rumored quest to launch a Pandora competitor. However it pans out, it's now known that Google and Amazon are at least attempting to enter the streaming music space. If all goes according to both companies' plans, they'll soon be in direct competition for digital music subscribers.  

Google vs. Amazon: From Frenemies To Rivals

The rivalry between Google and Amazon is expected to heat up this year, and this would just be the latest source of competition between the two companies.  While they started as two very different, seemingly unrelated businesses, the companies have both evolved into new territories, occasionally bumping into each other in the process. Today, both companies sell digital content like ebooks and music, as well as the hardware required to read and view that content. Like Google's arch nemesis Apple, Amazon is now rumored to be building its own mapping service as well. 

Digital music is not an easy business to be in. Six million people are now paying for Spotify,  with 18 million more listening for free on the desktop. That's stellar growth in just under two years and an impressive conversion rate for any freemium business. Still, Spotify isn't touting massive profits, and nor are any of its competitors.

That's because they're all paying a massive chunk of their revenues to rights holders (record labels, mostly) and struggling to find ways to drive those costs down. Pandora's legislative efforts haven't met with much success on that front.

Why Streaming Music? 

A company like Amazon might be able to use its might to negotiate better licensing deals. Even if it fails to do so, running an unprofitable streaming service (or bundling music with Prime) could rope enough additional people into Amazon's ecosystem to make the effort worthwhile. 

Or, if nothing else, it could prevent Google from getting a leg up on Amazon in the broader digital music space, in which both companies are already present. In an excellent post, The Verge's Tim Carmody points out that "few of these larger tech companies embracing streaming music seem to be doing so as an affirmative strategy, because they ultimately believe streaming music will help sell their other devices or services. Instead, they're primarily worried that if they don't offer a streaming music service, they'll be seen as deficient in some way."

It's also worth keeping in mind the mobile aspect. Google's stake in mobile is obvious, and Amazon's is expected to get even more serious if, as expected, the company eventually unveils a smartphone of its own.  As Wired's Mat Honan wisely points out:

Subscription and streaming only took off once 3G made it possible for you to carry your music with you everywhere. Pandora, Spotify, and Rdio have proved there’s an attractive market. But imagine what happens when a streaming-music app ships with your phone, with every phone, and all you have to do is turn it on, using an account you’ve already set up for billing. Or even worse (if you are an existing streaming-music provider) if it’s a free, advertising-supported service.

All this action in the streaming music space leaves little doubt that this model will be a crucial component of how we consume music in the future. It's the "music like water" model that music futurists once dreamed about. Exactly how it takes shape will depend on economic questions: how the business model evolves, how artists get paid, which companies will dominate distribution.

This year was already poised to be an interesting one in digital music with the impending U.S. launch of Deezer, the arrival of Daisy and ongoing rumors about Apple's plans to build a Pandora competitor. Now Google and Amazon are also both gunning for Spotify.

Funny old world, isn't it? Apple used iTunes to basically take over the music business, setting prices and dictating terms. And Apple ran roughshod over those record companies, which are still smarting from the rough treatment.

Now they're getting their revenge. The longer they drag things out, the more Apple suffers as new rivals grow stronger. The suits in Los Angeles must be loving this.

According to the Times: "Apple had once hoped to introduce the radio service around the Grammy Awards in February. But it has been delayed, chiefly by slow progress in licensing negotiations with record companies and with one key publisher, Sony/ATV, which also controls the EMI publishing catalog."

Another issue, according to the New York Post, is that Apple is low-balling the deal, trying to get streaming rights at a rate well below what others pay. Apple is offering 6 cents for every 100 songs streamed. Others pay 12-to-35 cents per 100 songs streamed.

Adding to the resentment, I'm sure, is that Apple is sitting on $140 billion in cash, some billions of which were gained by screwing record companies the last time around.

Once Bitten...

Last fall I had an interesting conversation with an influential player in the TV and movie production business, who explained the fear and loathing with which Apple is viewed in Hollywood.

Part of the problem, he told me, is that the video guys all saw what happened to the music guys after they got in bed with Apple. But also, "Steve Jobs came down here and did meetings in Hollywood, talking to people who've been in this business for 25 years, and he told these guys, `You're all a bunch of idiots. You're dinosaurs.' The response from the Hollywood guys was, `Go f@ck yourself.'" 

As far as Hollywood is concerned, "Apple is scary. Steve Jobs was scary. There's a fear of empowering Apple. No one here has a vested interest in helping to build that up. It's a scary time, and do you really want an 800-pound gorilla controlling your pricing?"

An Analog Model

The larger problem with iTunes is that it's really, essentially, an analog business model. Apple didn't really do anything revolutionary. It just "paved the cowpath," meaning it took the same business model that people had used in the analog world and created a digital knock-off. Just like you used to buy vinyl records, and then CDs, now you went online and bought an album or a song, and now you "owned" them and added them to your "collection" which you had to manage on a computer. 

You can argue that Apple did something a little bit revolutionary by letting customers buy a single song rather than an entire album. Fair enough.

But iTunes is still a model in which you buy music. The whole thing is about replicating the experience that Steve Jobs had as a kid buying vinyl records, even down to getting the album art. 

As many others have pointed out, once you start using Spotify (in my case) or any of the other new music-streaming services, you don't really want to go back to iTunes. And you don't need to.

Apple has a problem. It bullied those content guys in Los Angeles, and now those guys are getting their revenge.

Image courtesy of Reuters.

Kennedy and Pandora wished to wind down their relationship on a positive note, citing milestones like 67 million monthly active listeners and 70% market share. But most telling were the company's revenue and income figures. In fiscal 2013, Pandora totaled $427.1 million in revenue and $255.9 million in mobile revenue, with $125.1 million in revenue for the quarter that ended on January 31.

While those numbers beat Wall Street expectations and represent record revenue for the company, it still wasn't enough to push Pandora into profitability - and Wall Street doesn't like it when a post-IPO company is growing but still loses money. That likely translated into Kennedy's decision to step down.

On that $125 million in Q4 revenue, Pandora took a quarterly loss of $14.6 million (9 cents per share), which exceeds its year-ago quarterly loss of $8.5 million (5 cents per share) on revenue of $81 million. Given the long string of losses, Pandora has been aggressively seeking ways to wring more cash from its subscribers, including limits on free listening and a fierce lobbying effort against royalty fees.

(See also Pandora Remixes Its Free Listening Limits.) 

The Oakland, Calif.-based music recommendation service has had an up-and-down ride on the market since its IPO in the summer of 2011. Initially, Pandora opened at $16 per share and jumped into the $20s, but has since hovered just into the double-digit mark as the company scrambles to find ways to turn a profit.

(See also Could Music Licensing Costs Kill Pandora? Ask Lastfm.)

Despite the tumultuous relationship with investors, Wall Street seems to be responding well to Kennedy's decision: Pandora shares jumped almost 20%, to $13.96, in after-hours trading. 

The reason for the listening cap, according to Pandora cofounder Tim Westergren, is due to the increase in per-track royalty fees, which "have increased more than 25% over the last 3 years, including 9% in 2013 alone and are scheduled to increase an additional 16% over the next two years."

Westergren's blog entry detailing the new policy was succinct and to the point. Emphasizing that this change would only effect less than 4% of Pandora's monthly listeners, Westergren also took the opportunity to point out that computer users would be unaffected by the change, and that listeners were more than welcome to sign up for Pandora's paid subscription services.

Investors took note of the announcement too, with Pandora's stock down as much as 6.5% percent just prior market opening this morning. (Though that dip was shallowing out to less than 1% by the time this story went to press.) The listening cap, and Westergren's alternatives have revealed the continuing weak spot for online services: generating revenue on mobile platforms.

Blame Mobile, Again

The reason Pandora can continue offering free, unlimited and ad-supported music on computers is simple: there's enough ad space shoved at free listeners' eyeballs that will, along with the audio ads, cover the costs of those royalty fees. But on mobile, audio ads are about all Pandora can put in front of their listeners. You could increase the frequency of ads, of course, but that would likely lead to less listeners than more paid listeners.

Cracking the mobile puzzle is very much an enigma for online services, because the form factor and use of many mobile devices preclude the type of ad displays and other revenue generators that worked on PC platforms. It is especially difficult for music services that, unlike social media services that have their content created by the very users they serve, have to come up with fixed licensing costs to broadcast music tracks.

(See also Could Music Licensing Costs Kill Pandora? Last.fm's Troubles Are A Warning Sign)

While Pandora may take a bit of hit from this move, a smart trimming move like this should help weigh in costs and not irk users too much. Other services may see some migration from Pandora in the near-term, but those services are likely to be in the same boat and may have to implement similar moves of their own.

Music is expensive and mobile is a revenue suck. This combination is a bad playlist for companies like Pandora, until they can figure out a better mix.

The company is already a huge, albeit unofficial, player in streaming music. YouTube is now a top destination for listening to songs and albums, not to mention the trove of remixes and parodies that get uploaded everyday. Today, when teenagers want to hear a new song, they don't turn on the radio or buy a CD. They go to YouTube. 

There's good reason for that. First off, it's free. It also has an enormous amount of music. I've had premium subscriptions to Rdio, Rhapsody and (currently) Spotify. As extensive as those services' libraries are, there's lots of music they don't have. Whenever I can't find something on Spotify, I check YouTube and SoundCloud. It's usually there. Want to stream the Beatles from your phone? Their songs are all over YouTube, not Spotify. 

YouTube: The World's Biggest Accidental Music Service

If there was any question about the critical role YouTube plays in music discovery, it was answered last week when Billboard announced it will factor YouTube listens into the formula behind its Hot 100 singles chart. In a post-"Call Me Maybe" world, it's impossible to accurately analyze the popularity of a song without taking YouTube plays into consideration.     

Of course, the music-streaming use case is not quite what YouTube was designed for. It's a video site. It may work as a one-song-at-a-time music search engine to fill Spotify's gaps, but it's pretty poorly organized compared to existing music services. That's why Google Music is a more logical and likely home for this rumored streaming service, presumably with some cross-promotion via YouTube.

The fact that people turn to YouTube for music is something that evolved organically thanks to its user-generated nature and Google's willingness to pay licensing fees to keep the music playing. There's still plenty of copyright infringement going on, but Google is getting more aggressive about dealing with that. The RIAA may still complain, but more and more, Google is catering to copyright owners. Initiatives like this are exactly why the Plex is so eager to please the content industry.

Thanks to YouTube and the Google Music MP3 store, the company already has relationships in place with labels, songwriters and other copyright owners. But those existing partnerships aren't enough. The subscription-based streaming model is fundamentally different and requires unique, rather costly licensing deals.

Music Streaming Is About To Get Even More Crowded

If you think the music streaming space is crowded now, just wait. Deezer, a hugely popular streaming service now available in 182 countries, is in talks to launch in the U.S. sometime this year.  This summer, another much-hyped streaming service will go live, this time from Beats Audio, which acquired MOG last year.  Then there's the ongoing rumor about Apple taking aim at Pandora with an iTunes-based Internet radio product of its own.  

Exactly what Google's streaming service will look like is anybody's guess. That will depend in large part on what kind of content deals it can manage to negotiate. But the company is in a very good position to enter this space. After all, Google already has millions of streaming music users. It just needs to polish (and almost certainly rebrand) the experience and make it official with the major labels. 

Lead photo by Alexandre Normand

In an effort to make things cleaner, simpler and a bit brighter (a good move considering it differentiates the design from that of Spotify's darker hue), both the mobile and Web versions Slacker is now awash in a pleasant blue-and-white scheme. The browser version has an elegant single-page interface that prompts you to jump right into streaming with a search bar. One look at the old site, which can still be accessed through a link at the bottom of the homepage, illustrates just how much Slacker's design sensibilities have improved. It also went ahead and axed its old motorcycle-company-look logo, opting to simplify the design to better fit with the new color scheme and cleaner interface. 

But better design means nothing without stronger functionality to go with it. Slacker has always had competitive features, but the redesign makes them more accessible - and make now a good time to check out the oft-overlooked service. One strength is that Slacker is everywhere - on Blackberry, iOS, Android, Windows Mobile, Nokia and Palm as well as through your browser.

Slacker has also cut deals with a handful of car companies and entertainment-hardware manufacturues, from Ford and Tesla to Sonos and Logitech. So while it may lack the cultural pervasiveness of Pandora and Spotify, it certainly has the physical ubiquity to be a major player.

The new update adds a radio section with plugins for big players in the sports radio and news marketplace - ESPN and ABC News - with more to arrive in coming months. You can also find a few comedy channels in the section, opening the door for a slew of podcast and other unique Web chat platforms to find their way to Slacker. 

But Slacker's big strength has always been its more than 200 hand-curated sections, an output of creative human manpower that puts even the best algorithmic music-selection tools to shame. The ability to pinpoint the work of an artist during a certain timespan - a period that may not be tied to a specific set of albums - and then create a "station" built off that by other human listeners is invaluable.

Slacker's service, much like its competitors', is free if you can tolerate advertising. For $3.99 a month, you can get Slacker Plus, which kills the commercials, and $9.99 a month gets you the Premium version, which adds offline listening. To promote the new and improved Slacker the company is offering a free 1-month Premium subscription on February 14 and 15.

The State of Online Music report contains some big, but not altogether unexpected numbers: More people are listening to music online and artists saw more activity on Twitter and Facebook than they did in 2011. Across a variety of online sources, the Play button was clicked more than 93 billion times, a 45% increase over 2011. Pretty impressive, to be sure, but not a total shocker. 

Triple Play

Perhaps the most striking chart contained in Next Big Sound's interactive report is the one showing how SoundCloud's user activity tripling over the course of 2012. The service was already enjoying healthy year-over-year growth throughout 2012. Then in September, it saw a massive jump in monthly plays per artist, and the trend line kept shooting north until the end of December. Of the music services tracked by Next Big Sound, it was far and away the fastest growing. 

What gives?

The service's growth was probably aided by a major website overhaul, which put more focus on user engagement with continuous track-by-track playback and added more social functionality, such as a retweet-style sharing button designed to help audio content spread across the service. 

SoundCloud's redesign may have been the company's biggest project of 2012, but it didn't eat up all of the team's time. They also managed to push out major updates to most of their mobile apps, forge a ton of new content partnerships and convert the service's default player to HTML5.

Fueled by a few hefty rounds of funding, these initiatives no doubt helped SoundCloud better position itself as a sort of "YouTube for audio." The goal, in the company's own marketing speak, is to "unmute the Web." 

YouTube Still Rules

YouTube itself was another enormous source of online music last year. It didn't see  spikes as dramatic as SoundCloud's, but for most of the year, the video behemoth delivered more than 20,000 average monthly views per artist, in some months quadrupling what artists saw the previous year. 

Indeed, YouTube remains a much bigger source of music than SoundCloud, but the growth of the Berlin-based startup  is remarkable enough to make it serious contender in the online music space. 

Don't call it a Spotify killer either. For whatever reason, Next Big Sound's report doesn't include data from the dominant subscription service, but regardless of what the numbers say, the two companies' models are very different.

The Independent Alternative

For one, SoundCloud doesn't have to contend with the gargantuan music licensing costs that subscription services like Rdio and Spotify do. Whereas those services boast content deals with all the major labels and big indies, SoundCloud has a much larger selection of unsigned, under-the-radar musicians, remix artists and DJs. Indeed, about two-thirds of SoundCloud's fan activity in 2012 was centered around independent and unsigned artists.

What will ultimately become of SoundCloud? It's tempting to envision it getting gobbled up some Web giant like Google, but for now it's focused on building out a massive trove of content, weaving it all into the Web and making it easier to share. The "YouTube for audio" analogy looks increasingly apt, especially if its metrics continue to shoot skyward. 

(Read CES 2013: 5 Things You Won't See.)

Rattled by declining prices and lingering worries over the "fiscal cliff," gadget makers are likely to be more conservative than ever, focusing on extending tried-and-true trends rather than breaking out brand new ideas.

In fact, it's likely that CES 2013 is going to be, well, boring. As a 20-year veteran of the show, here's what I am expecting to see in Vegas this year:

1. Microsoft

No, I'm not totally disagreeing with Taylor here. As she correctly notes, 2012 was the last year that Microsoft plans to appear at the Consumer Electronics Show, although Consumer Electronics Association chief Gary Shapiro portrayed the company's absence as a "hiatus." Right.

Microsoft may not have bought booth space, but it will be represented by its manufacturing partners, which plan to show off Windows 8 PCs, tablets, all-in-ones and convertibles. The personal computer is simply too big to ignore, but I hear that the number of pitches for Windows 8 PC unveilings at CES is down, and that many companies are focusing on trivial matters, such as new colors. (Colors!?) Even the Surface Pro isn't expected to show up at CES, even though it's due out soon.

2. Tablets - From Off Brands

Yes, Taylor's right that a veritable flood of tablets were launched at the 2012 CES, but history tells us that where the big names tread, the smaller names are sure to follow. Amazon and Google, as well as Apple, have shown that there's a market for smaller, more manageable tablet form factors, and second- and third-tier providers are likely to try and bleed cost further out of the equation. You'll still see a number of Android tablets, mostly from by manufacturers you've never heard of.

Plus, I think we'll see more purpose-built tablets and peripherals. Last year, Razer showed off Project Fiona, a gaming tablet that ended up being vaporware. But I still believe that some manufacturer will throw out a Nexus 7-sized tablet with a Microsoft-style touch keyboard cover attached to it, and see if anyone will bite. Also look for tablet makers to try and shoehorn their products into some sort of software/hardware ecosystem.

By the way, Taylor's right: most major smartphone announcements are being delayed until Barcelona's Mobile World Congress in February.

3. TVs That People Will Actually Buy

People aren't buying 3D televisions. And while manufacturers will likely show off 4K, UltraHD TV technology, Taylor correctly points out that high prices and a lack of content make UltraHD pointless for most people right now. UltraHD doesn't make sense until cameras, cable and TVs all support it. (Still, while I may not buy the mammoth 110-inch UHDTV Westinghouse will show off at CES, that doesn't mean I don't want it.)

What people will buy, however, are connected televisions - and ways to connect their TVs - especially if they're cheap. Westinghouse just announced a television that supports its Streaming Stick, a $100 plastic stick that plugs into compliant televisions. There's still too much confusion here, which is why peripheral manufacturers like Roku and the small Google TV ecosystem just won't go away.

4. Connected Content

This is a catch-all category, encompassing everything from connected cars to second-screen apps that fling content to TVs and other devices, as well as peripherals that stream audio from Pandora and other services. This may sound like old news, but connected services creeping into more and more mundane devices is actually a game changer.

I'm hoping for more on the automotive front, but everything I've heard points to more autonomous automotive safety features, rather than suites of connected services. Blame the carriers' data caps for this: Streaming high-bandwidth media into your car might quickly blow through your data plan. Sending maps and other low-bandwidth data services makes more sense .

5. Digital Health/Fitness

They will never equal the splash of a new big-screen TV or smartphone, but digital fitness products should have an, er, healthy presence at CES. Consumers want things to both track their progress and distract them while exercising, and technology manufacturers are stepping up.

6. Crap

Seriously, I've seen enough smartphone cases to last a lifetime. USB keys, external hard drives, notebook sleeves, USB lights, fans, stickers and the like dominate huge swaths of CES's show floor. Sure there's a market for some of this stuff, but there's a fine line between junk and innovation. 

You know what I'm really hoping to see? Personal drones. Yes, the ones that we'd otherwise use to spy on enemy soldiers. I'd like to see a whole corner of the show floor devoted to those things, as a tool for tracking game, scouting inaccessible locations, and otherwise just having fun.

Would it be controversial? Absolutely. And that's just what CES needs. Otherwise, I'm afraid this year's show may end up being the dullest one in years.

For more, check out CES 2013: 5 Things You Won't See.

Image source: Flickr/PrimeImageMedia.com.

Indeed, the biggest moments in music tech this year all had to do with piracy or the tricky evolution of a business model to replace the one that started dying a decade ago. 

1. The Death Of SOPA / Megaupload Raid 

These two events were not officially related, but they happened within 24 hours of each other and they both helped frame the debate about content piracy. In late January, the uber-controversial anti-piracy bills called SOPA and PIPA were tabled by the U.S. Congress after massive online protests. The death of SOPA meant the fabric of the Internet would be spared from the wrath of the Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA) and set the stage for new legislative battles.  

Just as that attempt at fighting piracy ended, an even more dramatic one began when New Zealand police - by request of the U.S. Justice Department - arrested Megaupload founder Kim Dotcom and several of his colleagues in a military-style raid. The hacker group Anonymous responded with large-scale Distributed Denial of Service (DDoS) attacks that took out the Department of Justice's website. For the first time, the so-called "piracy wars" started to look like an actual war. 

The Megaupload raid marked the beginning of a lengthy legal procedure, but it also raised major questions about the rights of non-infringing cyberlocker users and caused similar services to get more serious about fighting piracy, if they didn't shut themselves down all together. 

2. Lars Ulrich Hugs Sean Parker, Embraces Spotify 

There could hardly have been a more symbolic official end to the Napster era and more importantly, the beginning of one in which all-you-stream music subscription services are seen as a legitimate way forward for the industry. Metallica drummer Lars Ulrich not only shared a stage with Napster cofounder Sean Parker to announce the band's arrival on Spotify, he hugged him. 

Major questions remain about the viability of Spotify's business model and whether it can fairly compensate artists, but it's still early in the game and the fact that Metallica has embraced the model is a positive sign. Don't hold your breath for The Beatles, though. 

3. BitTorrent Goes Legit

2012 was the year the strict association between the word BitTorrent and piracy started to erode. It still has a long way to go, but BitTorrent, Inc. has been aggressively marketing itself as a legitimate content distribution platform and teaming up with established artists and authors to prove it. 

Author Tim Ferriss may be the most high-profile content producer to partner with Bit Torrent, but musicians have been experimenting with the platform as well. After Pretty Lights published a bundle of free music and videos on BitTorrent, it soared to the top of Pirate Bay's download chart, the DJ saw a 700% increase in traffic to his website, collected 100,000 email addresses and, probably not coincidentally, sold out two concerts at the Red Rocks amphitheater in Colorado. For musicians, BitTorrent may provide an unexpected path to revenue.

4. Internet Radio Fairness Act Introduced

Internet radio providers like Pandora and iHeartRadio are expensive to operate. That's largely because these companies operate under a different royalty rate regime than terrestrial and satellite radio stations, both of which pay far less than Pandora to copyright holders. 

In September, a bill called the Internet Radio Fairness Act (IRFA) was introduced in the U.S. House of Representatives that aimed to level the playing field. Record labels, royalty collection organizations and some artists were less than thrilled with the IRFA. Congressional testimony and debate got underway in November and the issue is expected to continue to be a contentious one in 2013. 

Whatever happens with the IRFA as it was originally drafted (many predict its demise), something needs to give, and that something will have to balance the need for innovation with the rights of those who create music for a living. The end result of the debate that kicked off in 2012 will have a huge impact on radio's future. 

5. Amanda Palmer's Blockbuster Crowdfunding Experiment

2012 was the year that independent musicians, desperate for a new business model, started taking the crowdfunding craze seriously. In an age when revenue is harder and harder to come by for musicians, many turned to fans to help fund the recording of their album, production of music videos and other projects.

There were plenty of successful campaigns, but none got more attention than that of Amanda Palmer. The singer took to Kickstarter to fund the release of her album and ended up blowing past the $100,000 goal to rake in more than $1.1 million. Suddenly, crowdfunding looked like a viable model for musicians. 

The Amanda Palmer example is not without its caveats, though. For one, not all independent artists will have a fan base as rabid as the famously social media-savvy Palmer. About half of all music-related Kickstarter projects fail to reach their goal. For the right projects and artists, though, crowdfunding can work quite well, as Palmer demonstrated. 

Any artists that do luck out on Kickstarter might want to do their best to avoid the public relations headache incurred by Palmer after she invited unpaid musicians to play with her onstage - and was subsequently lambasted across the Web. 

Image courtesy of Shutterstock.

Probably not anytime soon. But it's certainly true that these high licensing costs make it much more difficult to do business. For evidence of that, look no further than Last.fm. Next month, the algorithm-fueled Internet music service is scaling back its most radio-like feature in several countries.

In the United States, Canada and the UK, Last.fm's radio streaming feature will still be available via Web browsers, but using it from their desktop client - just like its mobile apps - will become a subscription-only feature. The reason? You guessed it: The cost of securing rights to that music is too high for Last.fm to make the end product freely available, the company says.

In the UK, music licensing costs are even more onerous than they are in the United States, says radio futurologist James Cridland. It's exactly why Pandora isn't available there, nor is there an equivalent service. Last.fm is probably the closest thing the UK has, and it's about to see its functionality scaled back. 

"I'm not sure what the magic bullet is," says Cridland. "But at some point people need to stop and ask why there isn't a Pandora in the UK, which after all is one of the countries that produces the most music in the world." 

Cridland has done the math. Running a service like Pandora in the UK would require a company to pay out more money in licensing fees than they could conceivably earn in revenue.  

Internet Radio Is Expensive And Hard to Monetize

For Last.fm, licensing costs aren't the only part of this equation. It's also worth looking at the other end of the business model - namely, the revenue side. The fact that Last.fm is cutting its free radio service out of its desktop app suggests it's tightening up its freemium business model overall. 

It makes sense. Last.fm's desktop app collects a lot of listener data, but it doesn't appear to directly make money. I can play personalized stations from this app all day long without ever seeing or hearing an advertisement. Starting January 15, I'll have to go to the Last.fm website, where the entire layout is wrapped in display ads and before my Notorious B.I.G.-inspired station starts playing, Taylor Swift will try to sell me some perfume. 

The fact that Last.fm is pulling radio out of its desktop app all together - as opposed to augmenting it with audio ads - suggests that audio-only Internet advertising isn't quite as potent a force as once thought. Personalized, targeted radio ads seem powerful in theory, but they're far more lucrative when paired with video and display advertisements. Paying subscribers are even more valuable. Clearly, Last.fm is hoping to push users in either of those two directions as it continues to navigate a digital music marketplace that looks very different than it did when Last.fm was founded almost a decade ago. 

Last.fm isn't the big fish here - it's the canary in the coal mine. Pandora is far better-positioned than Last.fm, its chief U.S. competitor. Yet even at the head of the pack, business in the streaming music space is brutal. Music licensing costs may not kill Pandora, but Last.fm's troubles make it clear that the issue can wreak havoc on a music service's core functionality. No wonder Tim Westergren won't shut up.

These musical insights and many, many more can be gleaned from a massive, interactive data set published by Last.fm, the Internet radio and recommendation service. Its user base might not be a representative sample, but the numbers are still fascinating. Last.fm has also put together an interactive timeline breaking down music milestones and trends tied to its own music playback data. Rick Astley saw a big spike in listens in 2008, for instance, when "rickrolling" was at its peak. 

Last.fm has now been tracking everything its users listen to for a decade. Its "scrobbling" technology has been watching us hit the Play button since the iPod was a chunky white brick with a big click wheel. Today, it's baked into Spotify, a Chrome add-on and a host of digital music platforms and apps. 

The Value of Last.fm's Aggregate Listening Data

The service may not get the attention it once did, but Last.fm holds a uniquely significant, if underrated asset: Big Data. By embedding itself on desktops, mobile devices and within music services, Last.fm has an unparalleled, platform-agnostic view of what people are listening to. As a user, I can see which artists, empirically speaking, I listen to the most. Which songs I played excessively six months ago. 

Last.fm, of course, uses this data to recommend new music to me, which it actually does quite well. But there's also huge value in the aggregate data it collects.

What good are traditional music sales charts when people download torrents, stream albums on Rdio and check out new bands on YouTube? Not much actually.

But if we permit it, Last.fm can watch all of that activity, compiling rich and detailed data about what we listen to, both as individuals and as a group. That aggregate data could be a goldmine of insights for radio DJs and other tastemakers, argues radio futurologist James Cridland. He's right.

I hope Last.fm keeps spreading its API far and wide, and that more people opt to use the service, even if it does lack the buzz of Spotify or the headline-grabbing power of Pandora. The company should push hard to forge partnerships with music apps, hardware manufacturers and mobile platforms to keep collecting all that data. 

The insight we stand to gain would be pretty incredible.

We don't know exactly what radio will look like in 20 years (or if we'll even still call it that), but it's safe bet that it would it be utterly unrecognizable by the likes of Edwin H. Armstrong, who was awarded the patent for FM radio in 1933. We'll always have audio, but transmission via radio waves will be augmented by wireless Internet standards like 4G mobile broadband and Wi-Fi. Those networks will carry much more interactive and smarter audio content, which will likely push traditional broadcasters toward a more personalized experience. 

So who's forging this future? It's still early - and this space will undoubtedly be occupied by a few now-unfamiliar names by 2030 - but there are a handful of organizations already busy chiseling out that future. Keep an an ear on these 5:

Stitcher Radio 

Stitcher Radio is amazing. The four-year-old company blends terrestrial broadcasts with popular podcasts to let users build a highly personalized, lean-back radio experience. Since I started using Stitcher, I've spent a little less time in the NPR iPhone app (though I haven't abandoned it completely) and Instacast, which I had used to subscribe to podcasts. Stitcher also streams other local, non-commercial radio stations in your locale, which you might miss if you don't have an FM radio in every room in the house. 

Like Pandora does with music, Stitcher builds smart radio stations based on your preferences, which are based on your listening history and the familiar thumbs up/down tapping. It's great. If I want to listen to audio hands-free, Stitcher will play back new episodes of my favorite podcasts and public radio shows without me having to fidget with a radio dial or smartphone app interface. Stitcher features content from CNN, NPR, BBC, Fox News and a host of providers large and small. 

How It's Looking Forward: Earlier this year, Stitcher Radio announced a partnership with Ford, who will build the service (along with Pandora) directly into its new cars. Smart. 

Pandora

This one might seem obvious, but Pandora has stayed on top of the personalized Internet radio market for years, despite challenges by everyone from Last.fm to Spotify. The company faces some significant hurdles. As a public company, Pandora now must deal with pressure from investors - and the ongoing battle over artist royalty payments will likely come to a head in the U.S. Congress next year. But Pandora isn't going away.  

For my money, Pandora's Music Genome Project still provides some of the smartest semi-automated music recommendations out there. It doesn't yet rival the brain of a real live tastemaker, but it's getting there, thanks in large part to the human intelligence that heavily fuels Pandora's algorithm.  

How It's Looking Ahead: Like Stitcher Radio, Pandora is finding its way into new cars. It's also begging Congress to rethink the unbalanced artist royalty payments that Internet radio providers pay. Not everybody loves Pandora's proposal, but something has to give for this model to remain viable. 

Spotify 

Not so long ago, you wouldn't have associated Spotify with Internet radio. That's because the on-demand streaming service never attempted to offer the type of functionality that Pandora, Last.fm and Slacker have long been known for. That all changed last December, when the Swedish startup launched Spotify Radio, which emulates Pandora's functionality using the Echo Nest, a competing music recommendation engine. Any doubts that Spotify was serious about this push were cast aside in July, when Spotify Radio was made available for free in the service's mobile apps. 

How It's Looking Forward: Spotify's most promising feature is its third-party app platform. The year-old store now boasts more than 60 apps focusing on discovery, social music, promoting individual artists and whatever else developers can cook up. The platform is still desktop-only, but once it starts to go mobile, it will fundamentally change the way listeners consume music on the go. 

National Public Radio

If old media are supposed to be crusty and slow-to-innovate, you couldn't tell it by looking at NPR. The public radio nonprofit first went on the air in 1971, but unlike some of its counterparts in print media, it hasn't been sitting out the digital revolution. NPR's Digital Services team has been busy creating application interfaces, Wordpress plugins and experimental Web radio products. Its social media presence is impressive and its podcasts are some of the most popular on iTunes. 

Most importantly, NPR has invested heavily in its mobile strategy. It's got some immersive and content-rich apps for iOS, Android and Blackberry and has been proactive about using HTML5 to build a cross-platform, modern radio experience that works on just about any device.

How It's Looking Forward: NPR knows that it needs to be present on every platform its listeners might be using, and its done an impressive job of achieving that. By maintaining this spirit - especially when it comes to mobile devices - it pretty much guarantees itself a prominent role in radio's future. And NPR also knows the importance of partnering with car makers. 

Clear Channel 

NPR isn't the only industry incumbent that's thinking ahead. Terrestrial radio conglomerate Clear Channel sees the threat posed by innovative startups and has responded accordingly. Its iHeartRadio service combines 1,5000 live broadcast stations with personalized channels fueled by the Echo Nest's music recommendation application programming interface. 

The company's digital efforts are merely breaking even, but it hopes to change the equation by joining Pandora in its quest to get Internet radio royalties reduced. Digital may make up only about 5% of Clear Channel's total listenership, but the company knows where radio is headed. 

How It's Looking Forward: By putting its massive weight behind Pandora's quest to reduce Internet royalty rates, Clear Channel helps make change more likely. It also provides its own API that developers can use to bake iHeartRadio into other products, including cars. 

Other Players Forging Radio's Future

Narrowing this list down to five organizations was tough. So many technology and media companies are working on things that will make up the future of what we today call radio. Satellite radio will play a key role alongside FM and Internet radio, presumably led by Sirius XM for the foreseeable future, at least in North America. 

When I prop up my iPad and stream content from NPR, Stitcher or Spotify, it's a bit like using a futuristic radio. On my iPhone, smaller versions of those same apps let me bring the content with me in the car or when I'm walking down the street. Along with Samsung, Nokia and others, Apple is already building much of the hardware from which we stream audio content. Cupertino recently solidified this role by partnering with car makers to tighten iOS integration in vehicles. The company is even rumored to be launching its own Pandora competitor in 2013. 

It's not just giants that are jockeying for a spot in radio's future. Under-the-radar upstarts like Shuffler.fm and the Hype Machine turn music blogs into lean-back, mobile-friendly listening experiences. Even SoundCloud is growing more radio-like. Meanwhile, The Echo Nest's complex music recommendation algorithm is woven throughout a long list of Internet radio products, each of them aiming squarely at Pandora.

Lead photo by Rafael Kage.