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Here's Why Pandora Keeps Crushing the Market

Stocks in this article: P AAPL GOOG

NEW YORK (TheStreet) -- I'm not sure any of the companies that streamed (pun horribly intended) into the Internet radio space on the back of Pandora's (P) success, including Spotify, truly understand the opportunity Pandora has seized and continues to concurrently chase and dominate since deciding to redefine radio.

The only exceptions -- Apple (AAPL) and Google (GOOG).

They don't need to understand Pandora's opportunity. In fact, it's immaterial. Apple and Google do not run the risk of wholesale failure if they do not succeed at Internet radio. Because they're not in it for any other reason than to prop up their already lucrative core line(s) of revenue.

They're not out to "crush" Pandora.

However, in some way, shape or form, even the pure players who operate complementary to Pandora function as fierce competition. Some, like the misleadingly overconfident Beats Music, more than others. As TheStreet's Carlton Wilkinson explained last year, Beats will see success ... (pause for effect) ... however, the real question we should be asking is ...

How do they define success?

Most of the, again, pure-play Internet radio companies play the we'll define success when we see it game. They have very imprecise objectives.

Like to scale out subscribers. Good luck with all that.

Or to take the way Pandora serves Internet radio with the Music Genome Project and do it better. Exactly what that means I'm uncertain.

Pandora hit and moved past the $30 level because, slowly but surely, investors began to understand the story.

Pandora's focus on a set of well-defined goals and objectives -- missing from the conversation completely for a long time and, to some extent, still -- explains the ascent. Pandora, particularly the company's former CEO Joe Kennedy, saw radio as ripe for disruption so that's where it, squarely set its sights.

From a product/user experience standpoint, Pandora focuses obsessively -- sometimes even stubbornly -- on redefining traditional radio.

So it operates from pretty much the same premise as broadcast radio, except (and this a big except), given the delivery mechanism, Pandora can provide a personalized experience for each and every listener. This means it can take chances (nurture music discovery) terrestrial radio simply cannot take. When you're doing commercial radio for the masses -- and each member of the masses hears the same song -- you can't veer too far from what works for the average listener.

There's a fact that's crucial to the progression of this conversation -- Pandora has absolutely no faith in the large-scale viability of the subscription model. It has always been and, I think, will pretty much always be, focused on the free model.

There's a simple reason why ...

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