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TheStreet Open House

Why Pandora, Apple Investors Should Fear Amazon Prime Music: StockTwits

NEW YORK (TheStreet) -- Pandora  (P) and Apple  (AAPL) investors aren't scared of Amazon  (AMZN) Prime Music. But they should be -- at least a little.

Amazon launched a streaming music service Thursday for its Prime subscription customers. Prime customers pay $99 a year in exchange for free two-day shipping on many items in the Amazon store, as well as the ability to stream movies, borrow e-books and, now, listen to a library of songs from major artists.

Prime Music includes over a million songs and does not have ads. But Amazon's service lacks many of the draws of Pandora and iTunes radio, making it unlikely to steal these services' existing customers.

$AAPL Just tried $AMZN new streaming service, and it's not bad. Not as good as Spotify or Beats, but more free music if you're a Prime mem ? Randell G Gortney (@yentrog31) Jun. 12 at 05:41 AM

Amazon Prime Music doesn't fare to well in a head to head comparison with Pandora. Like Amazon, Pandora has a library of more than a million songs, according to Pandora founder Tim Westergen's comments at a September Goldman Sachs conference.

However, Pandora also has a "today's hits" station that plays new releases. Most of the songs on Amazon Prime Music will be six months old, according to a Wall Street Journal report, and Amazon's library does not include songs from Universal Music Group, the largest record label.

@CodiSmith @AKEB $AMZN can't touch $P with a sorry service that offers six month old songs. NO ONE will care about that, much less switch. ? Rotten Al (@RottenAl) May. 30 at 01:15 PM

Pandora also enables music discovery. The company's proprietary algorithm analyzes songs and picks similar tracks, enabling a listener to hear more music that they might enjoy rather than keep listening to the same old songs that listeners might even own already.

Moreover, Pandora is cheaper. An ad-free Pandora subscription is just $4.99 a month, or $60 a year. Prime membership costs $99 a year, although it comes with far more than a music streaming service.

@CodiSmith Hard to beat Pandora free service, we buy about $100 a year in iTunes music, eventually may just pay for a streaming service ? Tim Allen (@bittercheaperfaster) May. 30 at 11:28 AM

Pandora's stock rose 0.8% by noon, after the news. Amazon shares fell 1.75% as investors bet that the service would not steal Pandora's user base.

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