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TheStreet Open House

Why You Should Dump Spotify for Rdio

Stocks in this article: PAAPLNFLX

NEW YORK ( TheStreet) -- Because of my gig at TheStreet (and my love for music and digital platforms), I subscribe to several streaming and/or on-demand Internet radio services.

I pay $36 annually for Pandora (P), $9.99 a month for Spotify and the same for Rdio. I regularly use iTunes, VEVO, YouTube, iHeart Radio, Last.FM, Slacker, TuneIn Radio and others for free.

I eat, sleep and drink radio. Old-school radio, which I grew up on and in, and modern-day radio, redefined, primarily by iTunes first and, in three stages, Pandora.

Stage one: when Tim Westergren and his colleagues conceived the Music Genome Project. Stage two: when Pandora CEO Joe Kennedy envisioned the company disrupting radio. Stage three: when Steve Jobs introduced Apple's (AAPL) iPhone, propelling Pandora's now-explosive growth.

A radio background, coupled with my hyper-use of Internet radio, helps me comprehend a crucial reality lost on many, particularly the Spotify will crush Pandora crowd: A distinction exists between on-demand services such as Spotify and pure radio player Pandora.


When you know what you want to hear, you hit up an on-demand service. Over the weekend when I was in the mood for Springsteen's Magic album, I fired up Rdio, conducted a search and within seconds was listening track by track. In this case, Rdio "crushed" iTunes and Spotify, not Pandora.

I "own" Magic in iTunes, but for some admittedly illogical reason it might as well be a vinyl copy placed alphabetically in a milk crate. I prefer the experience of hearing the album through the Rdio platform. Of course, if I was in the mood for radio -- as we know it, yet redefined -- I would go to Pandora.

That puts Pandora in indirect competition with Rdio, Spotify and other services that lean toward the on-demand, curated playlist direction over straightforward radio powered by personalization and discovery. It's in direct competition with radio -- traditional radio. Kennedy saw obvious vulnerabilities in that business and decided to aggressively attack them. The rest is history.

To the extent that you're not using Pandora when you're using another service, they all compete, but, to understand the dynamics of the space, you must consider the notion of direct vs. indirect competition. Pandora's focus sets it apart from the rest.

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