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Rocco: Pandora's Critics Are Wrong, There Are Barriers to Entry

NEW YORK (TheStreet) -- I can't find the article to link to, but I recall writing that Simon Hobbs of CNBC has always intimidated me. Maybe it's the way he stares straight into the camera challenging his guests. It could be his well-timed decisions to put on his bifocals.

Or it might just be the British accent.

The first time I was on CNBC with him I was terrified. He makes Melissa Lee look like a lightweight. (That's not easy). After I discovered he's actually a nice guy, my fears subsided.

Late last week, however, they came back when I felt the need to challenge a comment Hobbs made.

We hear it all of the time: Pandora (P) doesn't have anything special because "there are no barriers to entry" in Internet radio.

Here's the exchange. The part with Simon comes in toward the end.



No barriers to entry. It's a meme. And it always strikes a chord with me, particularly with respect to Pandora and Internet radio. I didn't think the Raymond James' analyst did a good job handling the question. He agreed with Hobbs. And, "with all due respect," he should know better.

At some point, long ago, somebody somewhere said Pandora is weak because there are no barriers to entry. It sounds fantastic. Slips off of the tongue like the remnants of a dip of Skoal. If you dislike Pandora and want to validate your bear case, it's a nice talking point. You can make it stick.

As Hobbs proves, it's relatively easy to get the media to repeat it. So I don't blame Hobbs. He can't possibly know the ins and outs of every space; I sure as hell don't. "There are no barriers to entry!" Such a convincing statement, which, of course, is a key ingredient for the metamorphosis into meme.

Ask Apple (AAPL) about "no barriers to entry" as Tim Cook attempts to channel some of Steve Jobs's charm to twist the arms of record label and music publisher henchmen.

Try to assemble a sales staff that can effectively chip away at the $14-$16 billion broadcast radio advertising market Pandora goes after. I would put a Pandora salesperson -- often a former top biller from Clear Channel (CCMO) -- up against a warm body or cold algorithm from Apple or Google (GOOG) any day. They have the relationships. So much of what matters in Internet radio takes place at the local level; relationships matter.

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