Streaming radio service, Pandora, may soon be regretting opening its music box. Apple is apparently sticking with what should be their official mantra, “anything you can do, I can do better,” after reports began to leak that they are working on a streaming radio option of their own. With this one announcement, Pandora shares went into a tailspin, plunging 19%.
The breaking news, reported by the Wall Street Journal on Thursday, is yet to be confirmed by Apple, although industry insiders are saying that they will not announce this endeavor at their big event on September 12th. The news has left some scratching their heads over Apple’s motives, since streaming radio is relatively small beans compared to Apple’s other projects. But others are quick to point out that Apple could lose its grip on the music industry, notably with the sales of iPods, as users increasingly opt to stream their music for free, rather than buying it.
The plan is to possibly sell iPods and iPads with the Apple streaming music app already preinstalled, and may also connect device owners directly to their iTunes accounts so that the service can get a reading on their music preferences. This will no doubt dominate Pandora’s app, heavily used on iOS devices, which is not integrated with other music accounts of the user.
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Bank of America-Merrill Lynch analyst Nat Schindler sent a note to his clients this morning, saying, “Apple is currently the largest music retailer in the world and the move is likely being made to unseat rapidly growing streaming competitors like Pandora and Spotify. Apple’s large device installed base makes it a more serious threat than other current or potential competitors. Pandora we believe gets 40-50 percent of its total usage currently from iOS devices.”
Apple may potentially corner the market because they are going to make up for Pandora’s shortcomings. Pandora operates under limited licenses and, because of that, there are certain restrictions that often frustrate users. There are limits on the number of times a particular artist’s songs can be played per hour, you cannot rewind a song to listen to it again, and if you have a hankering for a specific song, you can only create a Pandora channel for that song and listen to similar songs while hoping that the one you wanted will actually play at some point. Apple may be looking to obtain direct licenses, which will give them, and in turn their users, more freedom. That, coupled with the fact that their devices are the majority of Pandora users, could just be the nail in Pandora’s coffin.
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