Pandora shares took a dive in Friday trading amid speculation that Apple may be close to a deal with major music labels to launch a streaming service.
The prediction that Apple is planning to launch its own online radio service has been a persistent one, cropping up several times over the past few years. The rumor mill kicked into high gear again Thursday evening after CNET’s Paul Sloan reported that Apple is in discussions with Warner Music and Universal Music Group to get the rights to feature their catalogs on a new service.
Apple spokesman Tom Neumayr declined to comment on speculation.
Pandora shares were down significantly in Friday trading — something that has happened in the past when rumors about Apple’s music service have surfaced. As of 3 p.m., the company’s shares had fallen over 7 percent to $12.82 from the day’s open of $13.52. Apple shares were down two percent to $420.75.
Pandora’s shares jumped earlier this month after the company reported earnings that exceeded analyst expectations, projected it could turn its first profit this year and announced that chief executive Joe Kennedy would step down.
But competition from Apple would pose a major obstacle for the company, particularly if CNET’s report that the tech giant will be able to offer music labels a stronger revenue stream proves true.
According to Sloan’s report, Apple and music labels are working out a way for users to buy tracks they hear on the service, currently nicknamed iRadio, from the iTunes store straight from their mobile device. While Pandora also offers the option to buy a track from the iTunes store or Amazon.com, Apple’s system would give consumers a more convenient way to purchase any track they hear on the service but would not let users pick which songs they want to hear in the way that streaming service Spotify does.
The report said that Apple could launch the service as soon as this summer.
Streaming music has grown quickly in the past few years, and digital music services have been cited as a main reason that the music industry saw its first profit in nearly a decade in 2012.
In addition to services such as Pandora, Spotify, Rdio and others, Google is also said to be working on a streaming music site through its YouTube video service, CNET reported earlier this month.