Then there's the poorly defined, hybrid-type services that achieve varying degrees of success such as Spotify. Frankly, I'm not sure Spotify knows what it wants to be. It doesn't have the focus of Pandora. And that's OK. There's room for Internet radio players along this continuum. I use them all, plus the stuff that fits somewhere between on the spectrum -- Google's ( GOOG - Get Report) YouTube, Apple's ( AAPL - Get Report) iTunes, Vevo and others. We shouldn't approach the question of Internet radio from the standpoint of how do we create the ultimate service? That makes no sense. Who listens to only one traditional radio station? Who watches just one television channel? Who uses one app per sector? We require the great diversity of experience that everybody from Pandora to Rdio to Spotify to YouTube and Vevo provide. Without this diversity, much of what's great about Internet radio dies. Sirius XM ( SIRI - Get Report) already crushed the promise of satellite radio. It could have been great; however it became little more than a vanilla offering that caters to the same people who supported AM radio on its deathbed.
That said, the Internet radio space absolutely requires consolidation. It might even need a Google or Apple to come in and make a big acquisition. Or three. That's the key for me. Maintaining the breadth of experiences -- a large number of eclectic platforms -- but creating a more powerful Internet radio bloc to, once and for all, put the unfortunate "enemy" (that collective known as "the record labels") in its place.
In a perfect world, Internet radio sees the same type of consolidation terrestrial radio did -- albeit on a smaller scale that leaves more than a mere handful of players -- but continues to produce a diverse set of interesting and worthy services. Take this diversity and put it together to steal even more market share and ad dollars from AM/FM as well as a considerable chunk of the exploding mobile ad revenue only Pandora, among Internet radio companies, claims today. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.