Content CostsBroadcast media doesn’t have this capability and consequently, Sirius doesn’t pay royalties by listener. The inability to accurately reach consumers drives its commercial-free, subscription model. Of course, charging a subscription fee limits Sirius’ user base. Sirius acquired just over a million new subscribers in the first 6 months. 54 million visitors use Pandora in a month. Pandora intuitively offers the more progressive, data-mineable model but advertisers move much more slowly since one ad campaign is no longer enough. The move to mobile platforms further complicates the ability to monetize listening hours. A quick look at the 50% of revenue content cost raises a red flag. Pandora pays per song means its high costs result from an inability to attract revenue as quickly as listening hours. Business Section: Investing Ideas At the end of the day, it’s still just radio. The end consumers (and maybe even some investors) see little difference and treat internet and broadcast radio as close substitutes. When assessing the two companies, Sirius clearly generates the stronger, more predictable cash flows. But while Sirius is bottlenecked with auto sales, Pandora has virtually no limit to adding to its marketable inventory. Pandora and Sirius could make an interesting pair trade, especially if you see one stock as supremely undervalued at the moment. Historically, P and SIRI have moved in opposite directions. Pandora has traded up over 5% towards its earnings release, despite operating at a loss, as the Internet Radio Fairness Act hits the congressional floor. Sirius, on the other hand, has taken a dive. The stock dropped 1.43% during the day despite steadily increasing its earnings over the last few years. Compare the past year’s performance; ‘E’ marks earnings dates: Use the links to access more data about the companies in this article: 1. Pandora Media, Inc ( P, Earnings, Analysts, Financials): Operates as an Internet radio company in the United States. Market cap at $1.51B, most recent closing price at $8.96.