Shares of Oakland-based Pandora were gaining 0.7% to $18.55, extending its three-month advance to 22%.

Pandora has continued to increase revenue even as the company remains unprofitable. Sales in the first quarter rose 19% to $230.8 million as loses totaled $25 million. Listener hours climbed to 5.3 billion from 4.8 billion a year earlier.

"We're relentlessly focused on extending our leadership position and making the Pandora listening experience even better for our loyal following of nearly 80 million active monthly listeners," a Pandora spokesperson said in an e-mailed statement. "Apple's investment in this category reinforces our long-held belief that there is healthy consumer demand for digital music services."

And healthy may translate into free. The notion that music streaming shouldn't require a subscription is reinforced by Google's (GOOG) YouTube. YouTube doesn't reveal the number of music streaming listeners on its platform, but Verna says it has become "a huge part of this market."

Unlike Apple, Google is more than comfortable selling advertising around music streaming on YouTube. Apple has long stayed clear of becoming an advertising platform. "It's just not in their DNA," Verna added.

Spotify is more likely than Pandora to lose market share because of Apple's streaming service. Apple's subscription service also appears to be an on-demand streaming platform rather than a personalized radio service whereby Pandora chooses songs based on a users initial selection.

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