Will Apple Copycat Pandora?

NEW YORK (TheStreet) -- The rumor that Apple (AAPL) is thinking about copying Pandora (P) raises interesting story angles.

After digesting the news, I came up with five:

1. Patents

The other day, Dallas Mavericks owner Mark Cuban went on CNBC and, as usual, made a ton of sense.

Cuban said that if he was Apple CEO, he would not sue Samsung over patents. Cuban contends software patents either should not exist or be subject to time limits. While he doesn't blame Apple for working the system, he finds it funny that companies stake claim to things like drop-down menus and rounded corners.

Pandora's co-founders patented the Music Genome Project. I have seen Pandora's music analysts work with it. If anything deserves a patent, this thing does. Believe me, every other attempt at "personalization" out there is little more than a cheap knock-off.

Apple does not know Pandora's trade secrets. As such, it could never duplicate the platform with any type of exactness, let alone effectiveness. Tim Westergren is a music geek's geek. Analysts go through seven insanely detailed pages to rate each song Pandora spins on myriad attributes that only hardcore musicians or Ph.D's in musicology could begin to follow.

In a nutshell, if Apple does something "Pandora-like," it will not only be relatively simplistic, but incredibly ironic, given what just went down in court with Samsung.

2. No Steve Jobs, No Innovation?

This leads to the obvious question that makes AAPL bulls defensive and uneasy: Can Apple still innovate without Steve Jobs?

Steve Jobs referred to 2011 as "The Year of the Copycats." Tim Westergren could get on stage today and use the same exact script, but replace "tablet" and "iPad" with "personalized radio" and be absolutely spot on the money. It would be a sad day if he had to include an Apple logo on his slide.

First, the mini iPad, assuming it happens. Next, a Pandora knock-off by Apple, assuming The Wall Street Journal got it right. Read: scary trend. Apple is not the same company it was in 2011. And that's not a good thing.

3. Will It Even Matter?

As a few analysts have noted, like all of the other copycats before it, an Apple take on personalized radio would have little impact on Pandora. It should flatter Pandora (though it would be much more flattering if it were coming from Steve Jobs) by validating the company's business model.

Amid competition from Spotify, Songza, iHeart Radio and others, several things remain constant.

Pandora's audience and popularity keep growing. The company maintains focus on something the copycats tend not to because they do not have first-mover advantage or the same strategic-competitive goals. Pandora is the only company properly positioned to disrupt traditional radio and its $16 billion annual advertising market. And nobody else has or can come even close to duplicating the Music Genome Project.

4. Pandora on iPhone

Here's where things could get dicey for Pandora. The company not only admits, but openly and happily credits Apple's iPhone with its success. In fact, the iPhone basically doubled Pandora's audience overnight.

Obviously, if Apple decided to omit the Pandora app from its devices, Pandora would feel the pain. For several reasons, however, that's unlikely to happen.

First, Apple, as far as I know, has no ax to grind with Pandora. And if they delete Pandora, you would think they would have to ditch many other, if not all, streaming music services. This would lead to consumer outrage. It could also drive Pandora (and Spotify) devotees to Android-based devices.

5. Could Apple Buy Pandora?

In an article I wrote over at Seeking Alpha almost a year ago, I argued Apple should kick Pandora's tires because: "Not only would Apple have the audio entertainment market cornered on cool, but it could perfectly integrate Pandora into iTunes and revive the failed social experiment known as Ping."

If Apple is going to do this the only credible way forward is to buy Pandora. I'm not sure why Apple would enter the streaming business in the first place, but it could seamlessly integrate Pandora with iTunes. If you're going to do personalized radio, do it right for goodness sake.

Would Pandora be open to a buyout? While Tim Westergren does not have a monopoly on the decision -- and I have not asked for his thoughts yet -- I surmise he would oppose a buyout.

He might accept one with conditions, i.e., Pandora maintains complete control over its user experience. I also think Westergren would have been much more willing to discuss something with Steve Jobs as CEO, but that's mere conjecture on my part at this point.

At the time of publication, the author was long P.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.

More from Opinion

Apple Needs to Figure Out Its Self-Driving Vehicle Strategy

Apple Needs to Figure Out Its Self-Driving Vehicle Strategy

Throwback Thursday: Tesla, Chip Stocks, TheStreet's Picks

Throwback Thursday: Tesla, Chip Stocks, TheStreet's Picks

12 Stocks That Our Writers and Their Sources Recommend You Buy Here

12 Stocks That Our Writers and Their Sources Recommend You Buy Here

Musk Goes on Unoriginal Media Tirade

Musk Goes on Unoriginal Media Tirade

What's Happening in Video Games This Week: On the Road to E3

What's Happening in Video Games This Week: On the Road to E3