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Google or Yahoo Buying Pandora Makes a Ton of Sense

Pandora Could Make Google the Most Dominant Internet Radio Player

Google already has what's best (even if imprecisely) described as a "Spotify-like" streaming service. It's part of Google Play. And it's on-demand radio with a cloud storage feature.

Key point -- this service and services like it (see, e.g., Spotify and Rdio) are distinct from Pandora. The way the platform serves music and the way you're able to manipulate and interact with the songs differs considerably between Pandora and these on-demand services. Pandora is traditional radio redefined whereas Google Play's music feature, Spotify and Rdio are direct avenues to assemble and organize music collections (though some offer relatively wimpy and ultimately secondary radio-like options).

With that in mind, a Google takeout of Pandora gives it instant control of the space Pandora now dominates. If you question Pandora's domination as a pure-play radio outfit, check its March 2014 audience metrics. Apple's iTunes Radio has done absolutely nothing to curtail Pandora's omnipresence.

Consider Google Music as an interconnected trio of Google Play, YouTube and Pandora and, suddenly, you realize Google could have everything it needs in place -- strategically and contractually -- to tweak terms here and there with the music industrial complex (labels, publishers, songwriters) and deliver music to the masses any way it wants. And the music industry would have no choice but to comply with Google's wishes. It has already ceded control of its product to third parties thereby putting it in a position where it hopes and prays technology companies move the puck in a direction that favors the industry's interests (even if they don't know exactly what these interests are).

Google could keep the music feature in Google Play as is, but cross-promote it through Pandora, giving Pandora's user base an on-demand option. And just like Google Maps, this -- we'll call it Pandora Radio by Google -- could live in Apple's iOS ecosystem. Tim Cook's not bold, crazy or dumb enough to jettison Pandora -- the top music app in Apple's App Store -- from iOS regardless of who owns it.

The YouTube Component Makes a Google-Pandora Marriage Even More Compelling

And this is where Yahoo! logically enters the mix. While Kara Swisher's Re / Code recently presented it as a scoop, it's common knowledge that Marissa Mayer wants to challenge Google's YouTube as part of Yahoo's still-developing video streaming plans.

But first ... focusing on Google.

YouTube as a destination for music streaming requires what some people might call order. And, while Google might not define it that way, they're, as the above-linked Billboard story (an actual scoop!) indicates, carefully figuring out how to provide it. Pandora could go a long way to getting YouTube where it needs to be.

I'm puzzled as to why Google hasn't integrated the music feature of Google Play with YouTube a bit more. Why not shuffle users between the two properties? (Maybe time spent on YouTube is worth more than time spent at Google Play?). But, all things equal, it would be ideal to combine on-demand streaming, artist- and genre-themed stations, radio redefined and music discovery via cross promotion of Google's YouTube, Pandora Radio by Google and Google's existing on-demand portal.

And give users the ability to control just how much integration they receive. Done well -- intuitively via slick user interfaces on each platform -- it could be a hit.

You're listening to Pandora and given the option to add the song you just thumbed up to your music "collection" or save the most popular YouTube video of that tune to view later. You're on YouTube mindlessly playing videos (not that there's anything wrong with this or that Google should discourage it) and you're prompted to create an artist-themed station to save for later or listen to now. You could add bootlegs from concerts you stream via YouTube to your Pandora mixes. The possibilities of what could come of a Google-Pandora union are literally endless.

Ideally, Google enters the live concert streaming space -- the way I think Yahoo should -- and capitalizes on the optimal flow that naturally exists between the aforementioned areas.

The Advertising Data Component

You'll see nothing but praise from me with respect to Pandora's ability to do radio, as a consumer product, and combine humans and data to build and execute a radio advertising sales strategy. That said, Google (or Yahoo!) could take Pandora's advertising business to the next level.

TheStreet's Chris Ciaccia has done a fantastic job connecting the dots between Yahoo, Yelp (YELP) and Marissa Mayer's aim to develop and master localized contextual advertising. On the next page we review what that looks like, on the ground, and discuss how and why Internet radio enters the mix. 

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