Apple’s Streaming Move Confirms Ad Focus

But Apple cannot throw in the towel on advertising. The network game is a rough one. In the end, it’s better to have owned inventory as an anchor to be complemented with a network. After all Google owns plenty of mobile inventory with its search, maps and YouTube. With a Pandora-like service, Apple would also have a big chunk of premium inventory.

Ads on the streaming radio service (which may be attached to iTunes to determine musical tastes) will have ads and what better way to get more inventory than by opening up a platform that could hit the 400 million people who use iTunes.

This could be a boon for developers. Apple clearly understands that its huge competitive advantage is in the thousands of developers devoted to making its platform addictive to consumers. That means providing these developers with a path to making money. Control-freak Apple can’t rely on others, especially Google, to blaze this path alone.

And there’s clearly work to be done. Streaming music has never been a particularly great ad business. The WSJ reports that Spotify took in less than 15 percent of its revenue from ad sales — the other 85 percent came from subscriptions

Mobile is still an immature industry. The formats available are uninspiring, the analytics are questionable and the backend is far from perfect. Apple getting deeper in the business is likely a positive force for the industry figuring out these issues to finally close the monetization gap between desktop and mobile.