Pandora (P) Hit as Apple (AAPL) May Launch Rival Streaming Music Service
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Pandora (NYSE: P) is getting slammed Friday morning following reports out Thursday night that it might end up facing even more competition. Like, very fierce competition.
According to the WSJ, Apple (Nasdaq: AAPL) is looking to intrude on Pandora's territory with a new Internet streaming music service similar to the one that Pandora is running. Apple might produce virtual "stations" which would play similar music to a song or artist of the user's choosing. The music could then be streamed via Intenet browser or smartphone app.
Apple's service would, of course, work in its entire hardware ecosystem, from the iPhone to iPad. The apps might also extend over to Microsoft (Nasdaq: MSFT) Windows-based PCs, though the WSJ said the service wouldn't work with Google (Nasdaq: GOOG) Android-based smartphones and tablets.
Competition for Pandora isn't new; Spotify was released in the U.S. last year, there's iHeartRadio, and an handful of smaller peers like Grooveshark. However, given Apple's outsized presence, the venture into streaming Internet radio would disrupt what Pandora has built its model around.
Having been mostly in the background to-date, Apple's iAd would run ads on the service, similar to that of what Pandora runs currently. That's good for Apple, given that Pandora hasn't managed to turn over a profit since going public last year. Royalty costs tend to eat into user subscription fees, though Apple might be able to negotiate better deals with labels and record companies given its scale.
Apple tried launching a competitor to Pandora in the past, but eschewed the move in favor of iTunes Genius service, which suggests songs users might like based on past purchases.
Currently, Apple runs iTunes across its ecosystem, which the company says had about 400 million accounts. By comparison, latest data from Pandora has the service with about 55 million active users.
Ahead of the bell Friday, Pandora shares are down nearly 8 percent.
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According to the WSJ, Apple (Nasdaq: AAPL) is looking to intrude on Pandora's territory with a new Internet streaming music service similar to the one that Pandora is running. Apple might produce virtual "stations" which would play similar music to a song or artist of the user's choosing. The music could then be streamed via Intenet browser or smartphone app.
Apple's service would, of course, work in its entire hardware ecosystem, from the iPhone to iPad. The apps might also extend over to Microsoft (Nasdaq: MSFT) Windows-based PCs, though the WSJ said the service wouldn't work with Google (Nasdaq: GOOG) Android-based smartphones and tablets.
Competition for Pandora isn't new; Spotify was released in the U.S. last year, there's iHeartRadio, and an handful of smaller peers like Grooveshark. However, given Apple's outsized presence, the venture into streaming Internet radio would disrupt what Pandora has built its model around.
Having been mostly in the background to-date, Apple's iAd would run ads on the service, similar to that of what Pandora runs currently. That's good for Apple, given that Pandora hasn't managed to turn over a profit since going public last year. Royalty costs tend to eat into user subscription fees, though Apple might be able to negotiate better deals with labels and record companies given its scale.
Apple tried launching a competitor to Pandora in the past, but eschewed the move in favor of iTunes Genius service, which suggests songs users might like based on past purchases.
Currently, Apple runs iTunes across its ecosystem, which the company says had about 400 million accounts. By comparison, latest data from Pandora has the service with about 55 million active users.
Ahead of the bell Friday, Pandora shares are down nearly 8 percent.
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