Here is a map illustrating how popular music is currently served to consumers. Some generalizations have been made to provide a "big picture" perspective in the context of brand identity.
|Search (ie. Google, Youtube) (NASDAQ:GOOG)||Extremely active user||Broadest range of selections|
|Stores (ie. iTunes, Amazon) (NASDAQ:AAPL) (NASDAQ:AMZN)||Highly active user||Minimally limited range of selections|
|Social (ie. Spotify) (NASDAQ:FB) (OTCPK:NPSNY)||Somewhat active user||Broad range of selections|
|Post-Social (ie. Pandora) (NYSE:P)||Passive user||Medium range of selections|
|Pre-Social (ie. satellite, terrestrial radio) (NASDAQ:SIRI) (NASDAQ:CMLS)||Extremely passive user||Limited range of selections|
The most important spectrum in differentiating these brands is level of user engagement. Investors will immediately recognize that the dynamics of competition are most violent between brands that border on this spectrum. Sirius and Pandora are in proximate competition; as are Google and Apple; as are Spotify and Pandora. Contrast this with range of selection: although highly similar in this aspect, Spotify is not often compared with YouTube. Level of engagement defines the experience.
Alvin Wong from Spansion (CODE) discusses the shift in differentiation among competitors, from features offered to ease of use of features offered. It's more important to have an easy service than to have a comprehensive one. Pandora, as the only post-social music brand, is well-positioned for this shift.
Let's face it, socializing presents challenges of its own. And Pandora occupies mind-share as the brand that balances selection with ease of use. As Pendola would say via Pincus, Pandora is a dial tone for music. As the post-social brand, Pandora is the dial tone with no operator.
Personally, I think a share bottom was called on April 18. But as Pendola would say, it really doesn't matter; Pandora is a company structured for endurance, and from this perspective all dips are discounts. Pandora is currently trading at the low end of the $8-18 range I forecasted.
Disclosure: I am long P.