With the September release of iOS 7, new iTunes Radio is automatically included and fully integrated with all of Apple’s services, which automatically reaches and feeds off anyone with an iTunes account, setting it up to be one of the most successful and widely used online radio platforms to date. But it’s not the first, and definitely has some well-established competition for both listeners and advertisers in the online radio market.

Let’s compare it to two big players – Pandora and Spotify:

Launched
Apple: iTunes Radio – September 2013.
Spotify: October 2008. Pandora: as Pandora Radio – July 2005.

Program availability
Apple: the iOS7 update works in at least 181 countries, but iTunes Radio is currently only available in the U.S. to anyone with an Apple device and/or iTunes account.
Spotify: 28 countries and compatible with Windows, Mac, Apple products and most tablets and mobile devices.
Pandora: 3 countries (U.S.A., New Zealand, Australia). Compatibility is the same as Spotify’s, due to their streaming quality.

Song availability
Apple: 27 million songs, due to its contracts with record companies and connection to iTunes’ already established library.
Spotify: 20 million.
Pandora: 1 million.

Users
Apple: as of the end of September, there are more than 200 million devices running the new iOS7 update … but with over 400 million iPhones and iPads sold in the last two years and nine million iPhone 5 units sold in its first weekend, that number will only continue to rise.
Spotify: over 24 million users.
Pandora: as of April 2013, surpassed 200 million registered users.

So, with possibly more than 450 million users tuning in to just these three online radio options alone, advertisers have an opportunity to market to an immense, but infinitely pin-pointable audience.

On all three services, basic membership is free with the inclusion of breaks for non-skippable ads – paying for a premium account eliminates ads, though the vast majority of users listen for free (e.g., of Pandora’s over 200 million subscribers, less than 3 million have paid accounts). Amount of ads and ad breaks differ per service – iTunes Radio is not implementing outside ads until January 2014 and instead runs Apple’s own, for now – but all follow the same formats:
 

• Audio
• Static graphic
• Video

Some programs feature special incentives, like on iTunes Radio, which plans to incorporate “iAd” interactive ads, or Spotify’s “homepage takeovers” in which advertisers can have their ads be the first thing users see when they start up the program – branded/sponsored/featured playlists are also options on certain platforms.

Algorithms differ by platform, but it all comes down to preference and “learning” the users’ tastes in order to suggest effective new music choices … translating to better and more exact advertising, served by addressing demographics, location and, especially, music preference which translates into assumed lifestyle – a devoted punk-rock listener is probably not going to want an advertisement for Miley Cyrus’ concert dates at the local venue. This is what sets them apart from traditional radio ads; online radio customizes the listening and advertising experience for each individual user, instead of depending ONLY on location or broad music category (e.g., a rock station vs. a custom garage-glam-new-wave-post-punk-indie-rock playlist) that needs to appeal to everyone who tunes in. By hunting down the exactly right people, online radio has the ability to make certain brands explode by serving them to only those who won’t tune them out.

And with Apple getting in on the game, competition and pressure to be the best at finding the perfect match of music and advertisements for their users is more intense than ever. Someday, after a particularly hard break-up, we’ll find comfort knowing Spotify has our backs by automatically programming hours of The Cure, Adele and Kelly Clarkson promising that we WILL be stronger after this experience, alongside ads for Kleenex, Ben & Jerry’s and EHarmony … with just a teardrop on the mouse pad.