This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Apple and Beats: Another Pandora and Spotify 'Killer'?

NEW YORK ( TheStreet) -- Look out! It's another Pandora (P - Get Report) and Spotify killer: Apple (AAPL - Get Report) and Beats Electronics talking partnership for a subscription music service?

If you don't know Beats, TheStreet's Carlton Wilkinson tells you much of what you need to know about Dr. Dre's company, including its music service ambitions.

Truth be told. Few people have even a semblance of a clue of who will do what when and how they will do it. Moreover, almost all of the speculation takes a pathetically myopic view of the Internet radio landscape.

The media just plays the same old, tired line that Apple will kill Pandora and Google (GOOG) will do the same with competing music services.

Thankfully, the stories I cite here -- from TheStreet's Chris Ciaccia and Billboard -- do no take the "crush" and "kill" Pandora and Spotify angle, but over the last year that has become the go-to line, particularly among uninformed and hysterical members of the financial media and Wall Street analyst "community."

Consider some key thoughts and points:

  • We really have no idea who's talking to who and about what.
  • My best guess on Apple: Those now old iRadio rumors; they're probably the same as this Beats rumor. It's probably safe to say that Tim Cook met with some music industry people in Los Angeles recently.
  • Spotify and Pandora have significant differences. Spotify negotiates music licensing deals directly with labels. Pandora, by and large, pays as per the rates set for Internet radio by the Copyright Royalty Board. Try both services and you'll see -- they're distinct from one another. Spotify is more like iTunes (or it is everything iTunes should be). Pandora is a more like radio, but it's IP-delivered with fewer commercials, more variety and optimal personalization.
  • But Spotify and Pandora do compete. No doubt. They both exist in the audio entertainment space. When you're listening to Pandora, you're not using Spotify. When you're using iTunes or Slacker or Songza, you're not using Pandora or Spotify (in most instances).
  • Room exists for many Spotifys and Pandoras. Think about it. Pandora disrupted radio. As such you have to view what a "radio station" is much differently than you did just a couple of years ago. Throw out the traditional sense of what you know a radio station to be. Pandora changed that definition. In fact, soon cars will come off of assembly lines without AM/FM radio installed!
  • With that in mind, view Pandora as a radio station, Spotify as a radio station, even iTunes or YouTube as radio stations. You flip between each on the basis of preference and/or whatever motivates you in the moment. That's what I do. The same as when I listened exclusively to terrestrial radio, moving between music formats and different types of talk formats.
  • In this new space of disrupted, IP-delivered radio, Pandora, in terms of revenue generation via advertising, has first-mover advantage. (Put an asterisk next to that because of Google's model; however, in terms of securing traditional radio ad buys from agencies and local businesses, Pandora, for all intents and purposes, stands alone among the Web-only players). Agencies looking to buy radio spots can now see Pandora's ratings side-by-side with terrestrial radio's ratings, as noted by Bloomberg. Given that Pandora is already the top station in several major markets, this could be a game changer.

    When you apply your sense of what radio is to this new context and consider traditional radio advertising as a major source of revenue, you immediately see through these calls that this or that rumored service will "crush" or "kill" Pandora or Spotify. Or at least, you should.

    -- Written by Rocco Pendola in Santa Monica, Calif.

    Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    Stocks Under $10

    David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    14-Days Free
    Try it NOW
    Only $9.95
    Try it NOW
    14-Days Free
    Try it NOW

    Check Out Our Best Services for Investors

    Dividend Stock Advisor

    David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Updates with exact steps to take - BUY, HOLD, SELL
    Trifecta Stocks

    Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

    Product Features:
    • Model Portfolio
    • Intra Day Trade alerts
    • Access to Quant Ratings
    Options Profits

    Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • Actionable options commentary and news
    • Real-time trading community
    Try it NOW
    Try it NOW
    Try it NOW
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!
    SYM TRADE IT LAST %CHG
    AAPL $128.46 0.00%
    GOOG $558.40 0.00%
    P $14.80 0.00%
    FB $78.97 0.00%
    TSLA $203.34 0.00%

    Markets

    DOW 18,132.70 -81.72 -0.45%
    S&P 500 2,104.50 -6.24 -0.30%
    NASDAQ 4,963.5270 -24.3630 -0.49%

    Partners Compare Online Brokers

    Free Reports

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs