Bloomberg News

Apple Inc. and major music labels have intensified negotiations to start an advertising-supported Internet radio service by early next year. 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 people who asked not to be named because discussions are still in progress.

With sales of music downloads slowing, Apple and record companies are seeking new ways for customers to discover and buy digital music. To challenge Pandora, Apple is seeking licensing pacts with labels that allow more flexibility about what listeners hear. Pandora relies on a compulsory license that limits how often users can skip tracks and how many times an hour an artist can be played. Apple is also seeking earlier access to new releases.

Executives from Vivendi’s Universal Music Group, Warner Music Group, and Sony Corp.’s music division visited Apple’s headquarters in Cupertino, Calif., in recent weeks to learn more about its radio plans, the people said.