Spotify Has the Bad Business Model, Not Pandora
Spotify simply does not have the infrastructure (or, as noted, the scale) to make this play. With every day that goes by, Pandora's head start -- its "first mover advantage" -- becomes more of a problem for Spotify. If Spotify ever gets a viable salesforce off the ground, it will need to chip away at the well-established leader in Internet Radio and one of the leaders in mobile advertising revenue. (See Absolutely Fantastic News for Pandora for those details).
Like Netflix, I'm not sure Spotify can stay solvent long enough to sniff Pandora, let alone become a serious challenger. That's why I argue that private equity is throwing its money into a black hole with Spotify. The venture firms better hope they can dupe retail on the IPO because, if and when Spotify goes public, the offering is not going to be a pretty sight.
--Written by Rocco Pendola in Santa Monica, Calif.
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