iTunes Radio Breaks Into Top Smartphone Apps

iTunes Radio has not turned out to be the “Pandora killer” that some predicted when the Apple music service was launched last September. Pandora remains the dominant player in online radio, with 77 million monthly users as of May, and a roughly 9% share of the overall U.S. radio market.

The audience for iTunes Radio is harder to pin down because Apple has been mostly tight-lipped about adoption. Last October, Apple CEO Tim Cook said the free streaming service had attracted 20 million listeners in the first month. But there’s been little new information since from the company on that front.

Within the audio streaming space (including on-demand services like Spotify), iTunes Radio had become the third-most popular service, with a 8% share, behind Pandora (31%) and iHeartRadio (9%), according to a report by Edison Research and Statista.

The latest smartphone market share report from comScore sheds some new light on the topic, with iTunes Radio making the list of the top 15 apps in May, based on reach. Coming in at No. 15, it had reach of 21.6% -- just below Google+ (22.5%), but well below Pandora, ranked No. 5, with 47.6% reach among U.S. smartphone users.

But although iTunes Radio cracked the top 15 apps in May, Andrew Lipsman, VP, marketing and insights at comScore, pointed out that the audience for Apple service has been fairly steady since it began tracking it in March. So from March through May, the app had an average of about 30 million unique visitors a month. 

“I think Pandora is still in pretty good shape in an overall leadership role,” said Russ Crupnick, managing partner of MusicWatch, a music-focused research firm. He said iTunes Radio had made good progress, but hadn’t seen the explosive growth some anticipated because of Apple’s huge base of existing iTunes users.

But he also noted more people are now using multiple streaming music services, making the audience more diffuse. “There’s a lot of Spotify users who are also using Pandora, for instance,” he said. “What’s curious about the space is at what point do people ever choose a favorite and go with it?”

On top of that, Crupnick observed that many people college-age and younger use YouTube as their de facto online music service. “You see teenagers play [music] video after video and just listening to the music, without even watching,” he said. Obviously, that's not a welcome long-term trend for any of the dedicated music streaming providers.

Apple effectively removed one new competitor when it acquired the Beats Electronics, including the company’s streaming music service. Apple has said Beats Music, an on-demand subscription service, would be offered alongside iTunes Radio and its music download service. Crupnick suggested Apple could start to bundle music services with devices to bolster usage, including iPads, Macs and Beats headphones as well as iPhones.

User growth, of course, will help drive ad sales on iTunes Radio. Launch advertisers for the digital music service include Nissan, McDonald’s and Procter & Gamble, but it’s not clear what level of ad revenue the music offering has generated for Apple. Advertising overall remains a small fraction 

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