According to those in the know, Apple has stepped up its talks with various music labels, trying to get them on board with a streaming-radio service similar to Pandora. Most of the talk is centered around who gets the ad revenue, but some believe we'll see the deals finalize mid-November. If Apple starts working on the service soon after that we could see a release date of Q1 2013.
According to BusinessWeek.com, previously, Apple had little interest in streaming - it already owned the world's largest digital music store (iTunes). However sales are starting to slow down as customers turn to other solutions like Spotify and Pandora instead.
Although Apple has the brand name, it still needs to offer more than Pandora to get users on board. At the moment, Pandora places restrictions on track skips and how often various artists can be played. Apple want to reduce the limitations for the service and also wants to allow listeners access to the latest releases.
If Apple does enter the radio market, it could seriously harm Pandora. Even rumors of a Apple music streaming service caused Pandora share price to drop 17%.
It'll be interesting to see if this affects the iTunes store as well - will Apple use a hybrid approach, allowing users to purchase certain songs if they like them, using the streaming service as more of a discovery tool than a replacement?