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Pandora Trash Talks Apple, Is Google Ready to Back It Up?

NEW YORK (TheStreet) -- One thing I've learned about consensus in the tech and financial media is that it tends to lag reality by about six months to a year. The idea that Apple's (AAPL - Get Report) acquisition of Beats will hurt Spotify, but not Pandora (P - Get Report) provides a nice case in point.

There's no doubt Pandora -- as lean-back and passive pure-play streaming radio -- is distinct from on-demand skewing Spotify. In fact, that's one of the points I made throughout 2011, 2012 and much of 2013 to build the ultimately accurate bull case for Pandora (P shares soared 52.7% from their IPO to the end of 2013). But things change, particularly in a space as dynamic as streaming media operated, largely, by technology companies.

You can't stand still. You can't assume that what was true in the past holds in the present and will remain static into the future, no matter how righteous you think it is. As it continues to stand still, Pandora runs the risk of falling victim to this mindset.

There's a core problem at Pandora: The folks in charge, led by the spirit of co-founder and former Chief Strategy Officer Tim Westergren, believe Pandora can replicate past success by focusing almost solely on what triggered that success. That's the tag team of personalized radio, powered by the fantastic Music Genome Project, and the sale of targeted ads purchased by the same folks who make up broadcast radio's $15 billion advertising market. While there's no reason for Pandora to ditch that strategy, every reason in the world exists to move beyond it.

Pandora is on record as saying the Apple/Beats combo isn't a threat. With that, they have never been more delusional. Because the CEO can't seem to speak on behalf of his own company, it was Pandora's CFO, Mike Herring, who made the misguided Apple isn't a threat comments at a recent investment conference:

Apple learned that as well coincidently with a launch of iTunes Radio again, much height, much anticipated launch of this radio service last September, we did see a slight drop in user from that and since it recovered and continued to grow ...
... iTunes Radio learned it the hard way that no matter how much muscle and hype you put behind something ... it's pretty hard to build market share.

That's not only pompous and condescending, it's the poster child for living in the past. Herring must have been too busy counting his millions (he, too, qualifies as a filthy rich Pandora executive; just see this). How else could he have missed the forward-looking statement Tim Cook made in the Beats press release:

Music is such an important part of all of our lives and holds a special place within our hearts at Apple ... Thats why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.

So to answer the question What's Next for Pandora? ...

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