Can Apple Make Money From Music Streaming?

In a research note commenting on Apple's reported plans to introduce its own music streaming service, Stifel Nicolaus analyst Jordan Rohan expressed doubts about the company's ad expertise.

As successful as Apple has been selling devices, it has not proven its prowess in selling advertising. Radio must be sold to ad buyers, many of whom buy only terrestrial radio and other non-digital media,” he wrote. An eMarketer report on Thursday projected Apple will make just $75 million from iAd revenue this year—less than a rounding error on its revenue of $35 billion in just the most recent quarter.

But even if Apple can't make much from ad sales in a new Web radio service, it could pull users away from the likes of Pandora and Spotify. A defensive move, but potentially effective. Just the prospect of Apple getting into the music-streaming business has been enough to send Pandora's stock down 17% today.

Rohan said the Wall Street Journal report about Apple's plans for a music-streaming offering leaves a lot of questions. Among them, will it be limited to its iOS platform or be available more widely? While the former would be more in character for Apple, it would leave a large portion of the potential audience on Android and other mobile platforms to competitors. How will it play out? Stay tuned.

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