Apple is planning to launch a free ad supported Pandora-like online music service in the first three months of 2013. Current negotiations with labels are focusing on differentiating features and how to share ad revenue. The talks could be completed next month according to Bloomberg.

Pandora and other online radio services operate under a compulsory license that governs how many times per hour an artist can be played, as well as, how often they can skip tracks. Apple is negotiating licensing deals with labels that would allow more flexibility and additional features including offline caching and earlier availability of new releases. [AlLindstrom]

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