Rumors say that Apple is designing a service to compete with Pandora.  The goal is to control the music people listen to in the car and make new releases available that much sooner.  Considering the huge success of iTunes, it stands to reason that Apple would branch out into this area.

The Future of Pandora

Apple is responsible for taking Pandora from a small music source to the king of streaming music when it was added to the App Store.  Pandora could be destroyed if Apple decides to drop it from its store in favor of an in-house product.

Will Apple Challenge Pandora?

 On the other hand, Apple’s new product, possibly called iRadio, could have a tough time competing with a veteran in the industry.  Pandora is the most popular music app on iTunes and has millions of devoted fans.  It also has a strong sales force in place with a good standing reputation.  This may make it difficult if not impossible for someone even as well-known as Apple to compete with.  Everyone saw what happened with Google Maps when Apple dropped it.  Quite a few people were upset, especially when the Apple Maps app failed to live up to expectations.

Deals with Record Labels

One issue that Apple will have to work through is cutting deals with the record labels for royalties.  Apple is going to want a lower rate on royalties with a share in ad revenue.  The app would be an ad-supported service with fewer restrictions for users.  For instance, they would be allowed to skip tracks and the required hourly plays.

The rumors also say that Apple is in advanced talks with the labels now and it can be expected that users will see the new app sometime next year.  The big question will be if Apple will take over the music market or if Pandora can withstand the challenge like they have with so many others.

[Image via dottedmusic]