This Day On The Street
Continue to site
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

Should Pandora and Spotify Merge? (Maybe Even at SXSW)

NEW YORK ( TheStreet) -- I'm all over Pandora's (P - Get Report) pivotal Q4 earnings report and Apple's (AAPL - Get Report) attempt to fix a stagnant iTunes.

Tim Cook should end the charade and take out Spotify. That's the obvious call here, as opposed to banging your head against the wall negotiating with the self-serving music industry.

With that in mind -- and with Pandora quite possibly silencing embarrassed bears once and for all -- it might seem like a strange time to bring this up, but what about the notion of a Spotify/Pandora merger?

Here's my thinking. Characterize most of it as thinking out loud.

There's no question Pandora crushed the quarter. Maybe not from a numbers standpoint, but its performance in mobile and, maybe more importantly, its continued hijacking of traditional radio advertising dollars, sends the message loud and clear -- we're for real.

But, there's still the music royalty issue to deal with. A few months ago, I felt like Pandora needed to be less aggressive in its fight to score an equitable royalty structure for Internet radio. Scratch that -- it's time to strike while the iron is hot and the doubters look like fools.

Of course, Pandora and Spotify are, by and large, completely different. Pandora is radio -- redefined, but still radio. That's it. You turn it on and receive the best personalized radio experience alongside discovery. Pandora sits side-by-side and, in most major markets, tops traditional radio stations in the ratings.

Spotify is everything iTunes should be, but isn't. Simple as that. While they're competitive, Pandora and Spotify are absolutely complementary. Both can and will endure over the long haul.

Pandora pays for most of its music through a regulated arrangement with the Copyright Royalty Board, also known as "compulsory licensing."

Spotify uses direct licensing, much like the way Netflix (NFLX - Get Report) buys its content. In other words, Spotify negotiates separate deals with music labels, etc.

Both models -- from a cost standpoint -- stink.

That's why it might be time for Pandora and Spotify to bury their subtle hatchet and talk partnership, if not merger.

Both companies -- though to a greater extent, Pandora -- have gained and continue to gain serious leverage. There's no question the content owners have control, simply because they own and control the content. They have done an excellent, even if inaccurate, job of controlling the conversation.
1 of 2

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
Only $9.95
14-Days Free
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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
NFLX $90.03 0.00%
P $9.93 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs