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Apple, Pandora Will Always Dominate Internet Radio

Stocks in this article: AAPLP

NEW YORK ( TheStreet) -- Watch this, then read that.

That's the crux of the situation as it stands in Internet radio. You can't even call it a two-horse race between Pandora (P) and Apple (AAPL). There's hardly even any friendly fire. In fact, I'm inclined to illustrate the "competition" between the two companies with this beauty:

Lack of scale. Lack of a focused strategy. One thing can lead to the other, no doubt. However, in this case, there's a whole slew of very good Internet radio companies -- Rdio and Spotify in particular -- who lack scale and, as a result, lose focus. Some (see, e.g., Spotify!) never had it in the first place.

Lack of focus plays itself out in nonsensical wandering from being a purely on-demand player -- strange integration of seemingly misplaced apps and dabbling in areas such as video. It's difficult to blame players smaller than Pandora and Apple for doing this. You'll have a difficult time selling advertising without some type of meaningful scale.

As such, expect consolidation among Internet radio companies. And, worse yet, some very good ones will fall by the wayside. Think of it in a way similar to your favorite traditional radio station being forced out of business or to flip formats because it just didn't fit with the dynamics of the consumer and advertiser marketplaces.

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