Forget the iPhone – Apple turns to iRadio for next big hit

Technology fans awaiting the expected launch next week of the latest iPhone may soon join have another Apple product to salivate over – an " iRadio" service.

The company that helped to turn digital music downloads into a viable and legal business with its online iTunes store is rumoured to be developing an internet radio platform. It follows speculation in the US that Apple could enter the increasingly popular market for music streaming, where people select tracks from catalogues and play them through a continuous internet connection, rather than downloading and owning their own digital copies of the songs.

Apple has reportedly chosen the radio option offered by the likes of Pandora in the US and We7 in Britain instead of Spotify's model of picking individual albums, artists or tracks. "My understanding is that it would feed you music based on your interests rather than you picking specific music," said Tom Pakinkis, of the industry magazine Music Week.

Apple is negotiating deals with US record labels, according to the Wall Street Journal, but a launch could be months away. The likelihood of it moving into online radio nevertheless sent Pandora's shares down 18 per cent yesterday. Steve Purdham, the boss of We7, which is owned by Tesco, told The Independent that the radio option made sense for Apple. "Licensing is quite difficult for the Spotify-type model – that is why they are losing money quite heavily," he said. "The other reason is that the majority of people know what they like but don't know what they want, and that's the reason for the success of Pandora."

Apple could face a small hurdle in launching its "iRadio" player: the name is already used by several radio stations and a mobile phone app.