Apple, Pandora Will Always Dominate Internet Radio

NEW YORK (TheStreet) -- Watch this, then read that.

That's the crux of the situation as it stands in Internet radio. You can't even call it a two-horse race between Pandora ( P) and Apple ( AAPL). There's hardly even any friendly fire. In fact, I'm inclined to illustrate the "competition" between the two companies with this beauty:

Lack of scale. Lack of a focused strategy. One thing can lead to the other, no doubt. However, in this case, there's a whole slew of very good Internet radio companies -- Rdio and Spotify in particular -- who lack scale and, as a result, lose focus. Some (see, e.g., Spotify!) never had it in the first place.

Lack of focus plays itself out in nonsensical wandering from being a purely on-demand player -- strange integration of seemingly misplaced apps and dabbling in areas such as video. It's difficult to blame players smaller than Pandora and Apple for doing this. You'll have a difficult time selling advertising without some type of meaningful scale.

As such, expect consolidation among Internet radio companies. And, worse yet, some very good ones will fall by the wayside. Think of it in a way similar to your favorite traditional radio station being forced out of business or to flip formats because it just didn't fit with the dynamics of the consumer and advertiser marketplaces.

Pandora has been able to maintain focus, in part, because it has scale. It also has an incredibly confident founding and management team. One that has been at this longer than anybody else and believes, with every fiber of their collective being, that what they're doing and how they're doing it will continue to win out.

Apple doesn't need to maintain focus in what amounts to a hobby, the complementary business, on the side, of doing Internet radio.

In and of itself, iTunes Radio operates as a feature for Apple hardware users. Within itself, iTunes Radio is a set of features designed to keep Apple hardware users happy and attract new ones.

Separately, though along similar lines, Pandora -- as well as other apps in the App Store -- functions as a feature for Apple hardware users. It just so happens Pandora is one of the longest-standing and most important apps Apple offers.

The company took the stage with Steve Jobs when he first started mesmerizing us with the iPhone. And, at last check, it's the third-highest-grossing app in the App Store. It also ranks 14th on the App Store's top free charts, ahead of popular platforms such as Vine, Google ( GOOG) Maps, Twitter ( TWTR) and WhatsApp.

That's Apple's software and services strategy in a nutshell, whether executed directly out of Cupertino or via a third party. The Apple hardware is the nuts. Convert all of the tools and features they require to make the most out of the Apple experience. And, of course, keep them upgrading, coming back for more and evangelizing on the superiority of Apple's devices.

These other guys have no such strategy. They're in the music and Internet radio business because it seemed like a smart, righteous, fun and/or timely thing to do. That's all fine and good. This has contributed to the best environment music listeners as well as musicians have ever operated in; however, to survive as a company, you need much more than this. Pandora and Apple have it; most others don't.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a columnist and TheStreet's Director of Social Media. Pendola makes frequent appearances on national television networks such as CNN and CNBC as well as TheStreet TV. Whenever possible, Pendola uses hockey, Springsteen or Southern California references in his work. He lives in Santa Monica.

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