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Apple iTunes radio inches closer

Erica Ogg flags an item from 9to5 Mac reporting on some hidden files found while poking around in a newly jail-broken iPad, including some new buttons in the iPad Music app with a a radio-tower icon, hinting that Apple is getting closer to launching its long-rumored music streaming service.

The 9to5 Mac folks seem surprised that the files are labeled “radio-buy-button,” which they suggest “could imply exciting new functionality.”

We heard no shortage of rumors that Apple planned to take on the Pandoras and Spotifys of the world with its own ‘Radio’ service, and Bloomberg predicted a Q1 2013 (current) launch…

Bloomberg alleged that executives from Universal Music Group, Warner Music Group Corp, and Sony Corp’s music division met with Apple at the company’s Cupertino headquarters to discuss radio plans.

Talks are centered in part around how to share ad revenue and a deal could be reached by mid-November, with Apple starting a service within the first three months of 2013, said the people, who asked not to be named because discussions are still in progress.

But there’s no real mystery as to why the “buy” functionality would be in there, also. As I and others speculated when rumors of an Apple streaming service first surfaced, Apple is unlikely to launch an advertising-only streaming service a la Pandora given that no one –including Pandora — has been able to make money that way. The more likely scenario is that Apple will launch some sort of hybrid service that involves advertising, paid subscriptions, and the ability to purchase instantly via iTunes the song you just heard on the streaming radio channel.

One reason it has taken so long to get off the ground, is that mixing those three revenue models into a single deal has never been done before and figuring out how to fairly divide the combined pot among songwriters, recording artists, the labels and Apple requires no small feat of lawyering. Whatever formula they come up with, however, using Pandor-like streaming to drive iTunes-like purchases will certainly be part of the mix.