Pandora (P -4.1%) bleeds for the second day in a row (previous) on concerns about iRadio's...


Pandora (P -4.1%) bleeds for the second day in a row (previous) on concerns about iRadio's impact. CFO Mike Herring's efforts at a BofA/Merrill conference to downplay the threat aren't doing much to help. A Bloomberg report claiming Apple is ramping its iRadio ad sales efforts and will share ad revenue with studios (apparently in return for playback options not supported by rivals) could be adding to the pressure. Will Apple disrupt Pandora in a way that Spotify, Amazon, Google, Sony, Microsoft, TuneIn, and Songza have thus far failed to?

From other sites
Comments (18)
  • James Sands
    , contributor
    Comments (2641) | Send Message
     
    Probably not.

     

    There are more people not using Apple products in the world. As long as Apple never gets a majority, they will always play second fiddle.

     

    I use Pandora, but only on my desktop. I have never owned an Apple product and I probably never will.
    4 Jun 2013, 02:54 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    What if Apple releases an Android version in addition to their iOS version?
    4 Jun 2013, 03:03 PM Reply Like
  • James Sands
    , contributor
    Comments (2641) | Send Message
     
    Vegas Ben,

     

    That could add more pressure, definitely.

     

    As a user of Pandora, I like how it functions. Free streaming radio with limited commercials, great flexibility to create playing lists. There is no need for me to consider another site, espcially an Apple direct product.

     

    I assume some consumers value radio streaming based on how they can integrate their personal preferences into the web/mobile application. What typically forces changes in behavior is cost-related. Pandora is free, so until they force a subscription, I don't see any reason to consider other options.
    4 Jun 2013, 03:22 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    I do agree that the non-Apple users are not likely to want to try an Apple app, so maybe an Android version is a long shot. However, I strongly believe that an Apple streaming radio service would have tens of millions of downloads per day in the first few days it is released in the App store, because Apple fanatics are... well... quite fanatical. If Apple's radio app is anywhere near the usability levels of previous Apple software and hardware, Pandora will lose millions upon millions of users within days. Streaming music doesn't seem like something that will improve Apple's financials much, but it could be a devastating blow for $P. I don't know exactly how many of Pandora's user are using Apple hardware, but I am quite certain that it is a very significant percentage.
    4 Jun 2013, 04:04 PM Reply Like
  • James Sands
    , contributor
    Comments (2641) | Send Message
     
    Vegas Ben,

     

    I don't follow Pandora direclty, but just checking some of their key metrics from my database; their advertising revenue per thousand listening hours is significantly higher for traditional computer versus mobile and other connected devices. However, as a portion of traditional computer, mobile and other connected devices are have grown from about 30% in April 2011 to 48% this past quarter.

     

    Off the top of my head I'm not sure what the breakdown is between mobile and other connected devices listening hours versus traditional computer.

     

    What is your basis for assuming Apple hardware is significant?
    4 Jun 2013, 04:20 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Pandora's news release:
    http://bit.ly/17meTSL
    200 million users. 140 million users connected on a mobile device.
    4 Jun 2013, 05:03 PM Reply Like
  • Eric Jhonsa
    , contributor
    Comments (1276) | Send Message
     
    Adding Android support would definitely make iRadio a bigger threat to Pandora. But that would mark a huge departure from how Apple has historically acted.

     

    Apple's main goal is to sell/profit from hardware, and its software/services efforts are aimed at creating an ecosystem for that hardware. Hence Tim Cook's recent comments about how iAd's purpose is to make money for developers, rather than Apple itself.
    4 Jun 2013, 05:06 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    I don't think it is much of a stretch to assume that around 50% of those 140,000,000 users connected via an IPad or iPhone. Not to mention the MacBook users, who also likely use iTunes.
    4 Jun 2013, 05:07 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    I agree Eric. Though, if Apple ever decides to start releasing Apps on Android, a streaming radio app might be a good place to start!
    4 Jun 2013, 05:14 PM Reply Like
  • James Sands
    , contributor
    Comments (2641) | Send Message
     
    Yea, Apple has sold about 138 million iPhones and 73 million iPads over the past twelve months.

     

    I think however, that not all Apple users are alike and that there is still only a niche obsessive Apple product consumer market.

     

    Just because Apple was able to break through the mainstream with iPods, iPhones, and iPads, doesn't mean that all the consumers buying these mobile devices are necessarily using all of Apple's other products and services.

     

    I think we need to really understand the breakdown between traditional computer listening hours and mobile and other connected device listening hours before getting too caught up in Apple's new foray.

     

    I just don't cover Pandora and Apple closely enough to compare Pandora's streaming platofrms versus Apple's iTunes and other products and services.
    4 Jun 2013, 05:26 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Apple has 500 million iTunes store accounts, which also includes Windows users.
    All they need to do is add a "Radio" button to the iTunes interface and Pandora will lose millions of users.
    4 Jun 2013, 05:41 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (212) | Send Message
     
    Interesting: http://read.bi/11xN9Xb (Survey on if people are interested in iRadio)
    7 Jun 2013, 04:46 PM Reply Like
  • James Sands
    , contributor
    Comments (2641) | Send Message
     
    I guess we'll see soon enough over the next few quarters with respect to tangible impacts.
    7 Jun 2013, 04:52 PM Reply Like
  • zubikov
    , contributor
    Comments (99) | Send Message
     
    Pandora's $2.5B valuation is based on growing its free users who aren't willing to spend $3/month to support it. The company doesn't license any of its patents. Anyone can step in and make better services. In addition, Pandora shot itself in the foot by locking in some of the steepest royalties in the streaming world. To pile on, it's celebrated algorithm isn't all it was praised to be a few years ago. We all know how limited and repetitive our playlists have become, and how we can't stand those 6 skips per station rule.

     

    When Apple steps into streaming with its 500MM iTunes subscribers, it will absolutely crush Pandora with native device playback, larger catalog and marketing muscle. If Apple decides to offer free streaming, P will be wiped off the map.

     

    Google isn't too far behind, only thing holding it back is the lack of users already using Play for music. Pandora is being shot at from every direction. It's only hope is M&A, and it doesn't look like there are many suitors willing to pay ~ $4B for a mostly ad-supported music service these days.
    4 Jun 2013, 03:16 PM Reply Like
  • James Sands
    , contributor
    Comments (2641) | Send Message
     
    Valid points.
    4 Jun 2013, 03:24 PM Reply Like
  • lance11111
    , contributor
    Comments (79) | Send Message
     
    I've been heavily investing in Pandora and reading all the articles for about two years now. There have always been skeptics. And there have always been Apple rumors. We knew it was coming.

     

    But I use the service for about 30 hours per week while I work and I love the product. They play a good mix and I never reach my skip limit, so I can only assume that is a small factor for many people (including my wife and anyone I've known that uses Pandora).

     

    I also love Pandora as an investment because I see how powerful of an advertising tool it is. All day long I am exposed to ads that target me specifically based on the info Pandora has on me (My Gender, age, and zip code). I have seen their ads evolve and become way more sophisticated and interactive. I clicked on a McDonalds ad the other day on my KindleFire and it took me into another world. The more I watch Pandora's story unfold, I can see that Every major player wants airtime on Pandora. I used to see cheesy little pop up ads on there about mortgage rates, but now I see full on commercials and sophisticated ads from Starbucks, Geiko, Allstate Insurance, Home Depot, Lowes, Cox Communications, Local Car Dealerships, Arizona Tourism, Utah Tourism, Seattle Tourism, Texas Tourism, Wendys, McDonalds, Wells Fargo, Chase, Local Credit Unions, Best Buy, Amazon Local, Living Social, Groupon, StubHub, Christian Mingle, and lots of other local ads.

     

    So many people have said over the years that they have no moat, or barrier to entry. Yet Pandora continues to dominate the numerous rivals. What they do have in terms of a barrier is billions of user "thumbs ups" and "thumbs downs" which tell them a lot about user tastes. And they also have a product that is compatible on hundreds of devices... not to mention all the new vehicles that are coming with a built in Pandora button. They build vehicles that way because that is what Vehicle buyers want.

     

    All this headway that Pandora has made over the last 8 years is not something anyone can easily replicate. Apple can definitely steal some users and user hours from Pandora, but they still have a growing user base that loves them. Pandora still has a good second place foothold on the Mobile advertising market (which is the way of the future). There is room for Apple, Google, and Pandora in this quickly growing mobile ad market.

     

    Bottom Line: Buy this stock quickly before it goes back up to $19 or $20.
    5 Jun 2013, 04:28 AM Reply Like
  • marketbuzz285
    , contributor
    Comments (49) | Send Message
     
    I use Pandora app frequently and realized more and more that i would have to skip multiple times in order to enjoy some more variety. Along with the fact that more and more ads are showing up (friends claim there is no ads on the desktop version). I feel that with iRadio's fan base and user base more and more will be willing to download something that is more in synch with their itunes library. I feel that iRadio is definitely more of a threat than google's attempt. Just my two cent.
    4 Jun 2013, 05:29 PM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (631) | Send Message
     
    ATD reports AAPL just signed Sony so all three majors are now onboard for iRadio. WWDC announcement expected.
    http://dthin.gs/18b5cre
    7 Jun 2013, 09:57 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs