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Apple about to earn its radio license?

While the imminent launch of an Apple TV is the rumor that won’t die, BTIG Research analyst Rich Greenfield has been building a pretty persuasive case over the past few months that an Apple radio product is likely to become a reality before we see any sort of TV product beyond Apple’s current Apple TV set-top box. Greenfield’s latest sifting of the tea leaves (registration) focuses on last week’s release of iTunes 11, in which Apple’s current-generation limited radio service for the first time is given its own tab in the horizontal nav bar alongside Songs, Albums, and Playlists.

Apart from the outward signs that Apple is close to launching a Pandora-like music streaming service, Greenfield also makes the strategic case that “iRadio” would be a critical piece of the integrated local advertising platform he believes Apple is building:

Think About This Scenario – Does Not Sound Far-Fetched At All

It’s Sunday afternoon and you’re set to go shopping at a nearby mall with some friends.  You grab your iPhone and get in your car.  Your phone wirelessly syncs with your car and you hit a button in your car with Siri prompted for a command.  You say take me to the ABC mall, Siri checks with Apple Maps, confirms the location of where you’re headed and then begins turn-by-turn directions.  Rather than fumbling through complex sub-menus for all your digital music alternatives, you simply hit a button for Siri again and say iRadio and ask for your acoustic station.  Siri tunes to your desired Internet radio station.   Since Apple knows where you are, the route you are taking and your final destination, iRadio can serve audio ads that are highly targeted, especially when combined with the types of music you listen to on iRadio/iTunes.  Even better, if an ad came up with a coupon or discount offer from a restaurant near the mall, you could simply use Siri and say add to Passbook and the ads would instantly appear in your Passbook and/or share the offer with the friends you are meeting by simply saying saying share offer via iMessage.

I’d add one more data point: Unlike the TV business, where the networks and studios still cling rigidly to the existing licensing model favoring traditional, linear pay-TV distributors over other platforms, the record labels have lately grown far-more flexible in how, and to whom they license content.

As I noted in a post last month, integrating Pandora-like service into iTunes would mean combining linear streaming rights and on-demand paid download rights into a single licensing deal with the labels. Up to now, the labels — like the TV networks — have tried to keep linear platforms and on-demand platforms separate, and have been reluctant to license both sets of rights to the same retailer. But that ice has recently been broken on the music side, most notably by Microsoft, whose new Xbox Music service combines subscription-based linear streaming, transactional on-demand downloads, and cloud-based storage in a single package.

In other words, the odds that Apple will be able to secure all the rights it needs for a comprehensive music offering are much higher now than its odds of securing the rights it would need for a subscription-based TV service.