iRadio, as the service has been called by some, will reportedly mimic the functionality of Pandora, offering users continuous streaming with limited interactivity. The company is negotiating directly with record labels as opposed to relying on the type of compulsory licenses that are at the core of Pandora’s business model. That means that Apple might offer its users slightly more functionality and fewer restrictions when it comes to music selection and song skipping.

However, iRadio won’t offer on-demand streaming of complete albums like users have come to expect from full-blown music subscription services like Spotify and Rdio. That’s because the Spotify model directly competes with Apple’s music download business. Pandora, on the other hand, actually helps Apple sell more music.

The NPD Group noted Tuesday that 38 percent of U.S. consumers still think it’s important to own their own music. However, among Pandora users, that number was even higher. Here’s how NPD put it in its press release:

“Among consumers who listened to music on Pandora and other free music-streaming services, 41 percent reported that owning music was important to them; in fact, many free streamers attributed buying more downloads to their discovery on a radio or via an on-demand service.”

The company didn’t make any data available about people who pay for a streaming subscription, but I wouldn’t be surprised to see significantly lower interest in music ownership amongst users who pay for unlimited access.

That’s why it’s smart for Apple to invest in iRadio. The goal is not to kill Pandora, but to actually bring that type of radio service to more users, and keep them from switching to a full-blown access model. In other words: It’s not about Pandora, and all about Spotify.

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The deal closed in late March, Aupeo CEO Holger Weiss – who will continue to head up his 20-person team – told me. It’s big news for the connected car industry, but also for Berlin, a city whose startup scene has been eagerly awaiting the validation of a major exit for the last couple of years. Frustratingly, though, the financial terms of the deal have not been disclosed.

According to Weiss, the deal will see both parties extend their reach:

“They’re buying technology, customer relationships and an experienced and gifted team. We’re already in Mercedes, BMW and all those other guys, and have been focusing strongly in the last 12-18 months on the connected car.

“Panasonic understands strategically that the internet-enabling of cars will [change] the use of the internet in the car fundamentally. You have the possibility of taking your smartphone and connecting it with the car, but the level of integration and according technology that are required to provide stable streaming while driving at 180mph is something a regular consumer-focused service cannot do.”

The deal is reminiscent of Harman’s 2010 purchase of Aha Radio, whose in-car Aha platform is found these days in vehicles from Subaru, Honda and Acura. Aupeo, meanwhile, has partnerships with Mercedes, BMW, Mini and Pioneer for its platform, which covers news and weather, radio, podcasts and audiobooks, and also uses text-to-speech technology. As for Panasonic, that company is already involved in Chrysler’s Uconnect platform — as is Harman, albeit as developer of a hands-free communication system — and Chevrolet’s MyLink.

The January announcement said Panasonic and Aupeo would “create customized cloud-based solutions, optimized for the automotive market”, and it now looks like a lot of that work will happen in Berlin.

According to Weiss, Aupeo will remain in Berlin as a wholly-owned subsidiary of Panasonic Automotive Systems Company of America, and will keep its name (and consumer apps and services). Berlin will become the “development hub” for Panasonic’s connected services strategy, he added.

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According to figures reported by CNET and confirmed by Spotify, the company now has 24 million active users and 6 million paying subscribers across the world. Spotify is also growing rapidly in the United States, where it arrived in July 0f 2011 and is this week hosting musicians at its “Spotify House” at the SXSW festival in Austin, Texas.

Despite the hype, the underlying economics of Spotify’s business model remain uncertain. The service is beholden to musicians and studios, which request a 70 percent cut, and it must contend with a growing list of competitors that include Pandora, Rdio and SoundCloud. Meanwhile, YouTube is expected to launch a subscription service of its own in coming months and even Apple is expected to get into the streaming game too.

This competition validates the underlying premise of Spotify — that people want access to a giant catalog of music instead of buying it piecemeal through iTunes — but the arrival of deep-pocketed rivals may hurt Spotify’s ability to compete in the longterm.

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Rdio, just as a refresher, is a subscription service that tries to set itself apart from market leader Spotify with a different take on social music curation. The company offers limited free music for up to six months, but doesn’t do ads.

That’s different from Spotify, which launched a free, ad-supported mobile radio service in the U.S. last summer. The company is now looking to expand its free mobile tier to all of its 17 territories, Bloomberg reported Monday. Deals for such an offering are still under negotiation, but Spotify could start with its free streaming as early as April.

Spotify’s free mobile service is more like Pandora, offering users limited interactivity with the hopes that some are going to subscribe to a full-service offering. And the interest in music subscriptions is definitely growing: Industry association IFPI’s latest Digital Music report (PDF) claims that worldwide, 20 million consumers paid for music subscriptions in 2012. And in Europe, subscription services made up for 20 percent of all digital music revenues during that time period.

That number was largely driven by a strong showing in Northern Europe, which is Spotify’s home turf – but services like Rdio seem to bet that this success story can be repeated in countries like Austria as well.

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Those quarterly results were mixed: for the company’s fiscal Q4 2013, which ended in January, Pandora clocked $125 million in revenue during that quarter, compared to $81.3 million during its fiscal Q4 2012. However, losses also grew substantially to $14.4 million, compared to $8.1 million a year ago. For its fiscal FY 2013, Pandora incurred losses of $37.7 million, which is up significantly from the $19.9 million it incurred in its fiscal FY 2012.

Pandora has long struggled with finding a business model that matches its high licensing costs. The company spent 61 percent of its revenue last year on music licensing, and it has repeatedly pushed to lower the rates it has to pay rights holders.

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“Pandora’s per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone and are scheduled to increase an additional 16% over the next two years. After a close look at our overall listening, a 40-hour-per-month mobile listening limit allows us to manage these escalating costs with minimal listener disruption.”

According to the company, the impact is limited to just 4 percent of all users, which is surprisingly low. Perhaps more folks use the free streaming on desktops or laptops connected via Wi-Fi as opposed to smartphone and tablet users on costly mobile broadband networks.

Regardless of how people use the music service, pricing is understandably a challenge: Record label fees are negotiated at set royalty rates for a given time, but Pandora has no control over the demand for or growth of its service. The small $0.99 fee to continue music past the 40 hours in a given month seems reasonable to me, and I say that as a paying Pandora subscriber. I pay $36 a year for unlimited, ad-free music through Pandora mainly because I access it through multiple methods: my laptop, phone, tablet and even my television and car, both of which have integrated Pandora apps.

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The site, which lets people share their favorite music track-by-track, has proven an underground hit online less than a year after launching publicly: more than 100,000 users have signed up, sharing over 900,000 songs. But the London-based service was started as a pet project inside music data company The Echo Nest — and it’s now exploring what happens next.

“Up until this point we’ve been incubated by The EchoNest, but now we’re looking at options for spinning out in our own right,” creator Matthew Ogle told me.

It’s been an unusual course for This Is My Jam so far — in fact, Ogle says that the site “wasn’t supposed to happen for a whole bunch of reasons”. Chief among them? The fact he’d decided to move out of the online music industry after leaving his role as head of web product at Last.fm back in 2010.

“Despite swearing off online music forever, in less than a year I’d been convinced by the awesome folks at The Echo Nest that we could do some cool stuff together,” he says. “They didn’t hire me to make Jam, they hired me in a dual role to be their man in Europe — evangelizing at hackdays, talking to developers — and also to be a kind of internal product skunkworks, prototyping stuff based on new APIs and using that to spark new direction that The Echo Nest could be going with their data.”

But when it turned out that Jam, an idea he’d been throwing for a while, had more going for it than the other skunkworks proposals, Ogle’s focus switched and the parent company funded development. Jam now has four full-time staff, as Ogle brought on former Last.fm refugee Hannah Donovan, and engineers Ralph Cowling and Andreas Jansson.

The failure of frictionless

The site is one of my favorite services to have launched in the last year or two, and it’s one I’ve found myself going back to more often than I expected. Posting your favorite tracks and browsing the tracks of others turns the site into a curious mixture of status update and radio station. It’s a great tool for telling people about the music you like — lots of people use it to showcase their mood, for example. But it’s also a treasure trove of music, allowing you to dig around in the tastes of others. Because it’s almost exclusively focused on what people are listening to now, it has a real-time quality to it… yet the conscious decision that goes into making your choice means that the end result is more personal than Pandora but way more curated than Spotify’s frictionless sharing.

In fact, says Ogle, the failure of frictionless sharing to provide anything more than a fleeting dip into a raging river of data left an interesting gap for Jam to fill.

“I couldn’t quite believe that in 2011 that social song sharing wasn’t just a solved problem,” he explains. “One thing that we talked about at last.fm a lot — you know that amazing moment in real life when someone grabs you and say ‘you have to hear this song, check it out’ and they put the headphones in your ears or put a record on. Anyone who cares about music even a little bit has had that moment.”

“We’re in this golden age of social media, we’re always connected to all of our friends at all times, and there’s big data around music — Spotify and Facebook have basically taken scrobbling to the mainstream — [so] there should be more ways than ever for me to go ‘I want to hear some new tunes, what are my friends listening to?’ and get good stuff… not just whatever they happened to accidentally listen to on Spotify. Conversely there was no way for me to share a song that people would still see five hours later. Everything was being forced in real-time.”

Curation/exploration

Donovan, who heads up the site’s design, points out that isn’t just vanity that drives — the performative aspect of social media where you are showing off your taste to others — but a sort of shared curation where users collaborate to uncover interesting tracks, point to classics or dig up forgotten material.

“This was actually really cool when we discovered this happening, because there’s no other music service on the internet where it’s OK to have old stuff mixed in too,” she says. “Either everything is organized around the music data thing — singles live inside albums that live inside artists — or it’s promotional in some respect, in which case they’re always pushing the latest album or the latest single that just came out.”

“On top of that I think there’s something around our culture today that’s driven by newness, and how things on the internet always have to be the latest and the newest. I heard somebody say when you’re curating something, you don’t necessarily want just the latest or the newest, you want to dig up old things that were really great and put them back in context alongside newer things, or mixed in with other stuff. That’s the job of the curator and that’s what makes it really enjoyable for the user or the observer.”

“We thought about curation a lot when we were starting Jam. The overall effect is that our users became the curators of this music, and we wound up with this lovely space where you could get Prince and Fleetwood Mac right next to the latest trendy pop band.”

That is, in turn, helping the product develop further forward. Coming very soon are some new additions to the site’s Explore pages, which will offer up some new ways for users to browse the site. Explore categories will include “Breaking” (songs that have been jammed for the first time recently, and subsequently shared), “Rare” (songs that have been jammed only once), and another one that lists just the first jams of newly-registered users. Although it could act as a way for users to introduce themselves to the service, the first jams could also become a sort of Greatest Hits package.

“A lot of people sign up and start with their favorite song of all time,” says Ogle.

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Westergren said Thursday that while he respects and admires the product that on-demand music streaming services like Spotify offer, these services are “not fundamentally competitive with radio listening,” emphasizing Pandora’s algorithms and discovery elements as Spotify ramps up the competition.

“Their principal product is on-demand listening,” he said. “If you want to listen to Dark Side of the Moon, they’re great.”

Speaking at the Financial Times conference at Stanford Thursday, Westergren emphasized Pandora’s  superior algorithms that predict what music listeners will prefer, contrasting the service with Spotify’s more on-demand streaming service. However, Pandora isn’t the only company that can develop algorithms, and it’s becoming clear that Spotify wants to improve its discovery system to compete. On Thursday morning in New York, Spotify CEO Daniel Elk announced new features on Spotify including algorithmic suggestions and a new Twitter-like music graph that could challenge Pandora’s dominance.

However, Westergren said he doesn’t see Spotify as a competitor, citing a figure that 80 percent of American music listening occurs on traditional radio — in which he includes Pandora — and only 20 percent comes from paid or on-demand music that the listener specifically selects. Westergren put Spotify in the 20 percent category, and dismissed it as being in the same business.

“It’s a lot harder than it looks,” he said on developing the algorithm that suggests songs users will enjoy based on new music and past listening. “And people have tried and failed to compete with us.”

Westergren said if you looked at a graph of Pandora’s growth, you wouldn’t be able to tell when internet music competitors had launched because they had so little impact on the business. Instead, he said traditional radio is who they hope to compete, and critical to that competition will be legislation up for debate that would lower music licensing for internet radio.

“Internet radio has really been suffocated,” Westergren said.

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