NEW YORK (
) -- When
Maps, a fair number of people got angry.
Apple wants to take Maps in house. That makes sense.
That said, I'm not sure why Apple would want to challenge
in streaming music.
BTIG analyst Richard Greenfield went on
last week with a reasonable explanation.
Greenfield said Apple wants to own infotainment functions in the car via Siri. Fair enough.
Internet memes aside, it's not as easy as it looks to crush Pandora.
I give crush thesis advocates this: If Apple decides to drop Pandora from the App Store (and somehow render it useless for those who have already downloaded the app), Pandora is screwed.
It's simple, but true. When Apple launched iPhone, it made Pandora, transforming it from a primarily desktop-based application to a more versatile, mobile one. In reverse, Apple could break Pandora.
But, does Apple want to do this? And why would it?
First, all indications point to a good relationship between the two companies. Back in the early days of the iPhone, Steve Jobs welcomed Pandora on stage for a demonstration. Just last week, at the iPad mini launch, Apple mentioned Pandora and included it in presentation slides.
Second, despite the negative market sentiment, lots of people love Pandora.
It consistently ranks as one of the top downloads in Apple's App Store. More often than not, it's the leading music app.
If Apple removed Pandora from the App Store, it would face at least as big a backlash as the one that followed the dissing of Google Maps. When you mess with a daily habit such as Pandora, you run the risk of upsetting quite a few people.
Plus, despite Greenfield's conjecture, iRadio could backfire.
Apple apparently would make iRadio an ad-supported service. If it intends to challenge Pandora in local markets, it's important to realize that Pandora has a huge head start from an infrastructure standpoint (e.g., sales staff). Plus, it already dominates Internet radio marketshare and rates as one of the top, if not the No. 1 station, in the nation's largest markets.
Even for Apple, this is a tough, if not impossible, nut to crack.
Then, there's the issue of cutting royalty deals with labels.
The labels have little reason to give Apple what it wants: more flexibility than Pandora and a lower royalty rate in exchange for a share in ad revenue.
Apple has fleeced the music guys before. Now, like television executives in Hollywood, the labels are playing hardball on a deal.
If Apple really wants to do this, it likely will hammer out an agreement, but Pandora doesn't go away the day Apple signs on. The Apple competitive threat poses no more of a threat than dozens of others already in the marketplace.
promotes its iHeartRadio 24/7 on roughly 850 radio stations across the country broadcasting to 237 million listeners each month, and it has had virtually no impact on Pandora's growth.
The present debate over royalties and progress of the Internet Radio Fairness Act in Congress should (and does) concern Pandora as well as investors more than any competitive encroachment.
That's what needs to end well.
At the time of publication, the author was long P
Rocco Pendola is
Director of Social Media. Pendola's daily contributions to
frequently appear on
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