Apple planning iAd-funded music streaming service?

Apple is considering to expand its music service by licensing a custom radio servicing device, offering free music streams funded by iAds, according to a news report. The Wall Street Journal reports that the company is in talks with record labels to provide customized streaming music, in a move that would put Apple in deirect competiton with the likes of Pandora, Spotify and WE7.

The paper reports that the application will run on Apple hardware and any computer with windows operating system. The service would be a part of the iTunes and not a separate app.
Services like Spotify and Pandora let users listen to ‘virtual’ radio stations that play only music in the genre or style that the user chooses, saving all that laborious searching for different tracks. The music is streamed for free to user’s computers or mobile device via an app.
Rather than stream 16 million songs on demand, Pandora lets users select their music tastes and creates a custom radio station stream that matches their preferences.
The sources, who wished not to be identified because the negotiations are confidential, claim that Apple’s service will take the form of a preinstalled app on Apple’s iOS devices and would connect to a user’s iTunes account to determine their music taste from prior purchases.
Apple is also reportedly planning to integrate their iAds platform with the new service, similar to Spotify and Pandora that offer music streaming for free in exchange for listeners being served ads intermittently.
Whether Apple plans to share any of the advertising revenue with the labels or instead pay a licensing fee upfront is unclear. It is also unclear how much of the revenue will eventually flow on to artists.
Another option Apple are no doubt considering is a paid service. The idea is hardly original, users of both Pandora and Spotify can eliminate the ads on those respective services by paying a small subscription fee.