Pandora (P)  fell Wednesday on doubts that the Internet radio operator made a smart and prudent decision by spending $450 million to acquire Ticketfly, the concert ticketing service that has long trailed the market leader, Ticketmaster, a division of Live Nation Entertainment(LYV) - Get Report .

Oakland-based Pandora tumbled 4.6% on news of the cash and stock deal, closing at at $20.98. 

Ticket fly is a nice business, but it's no Ticketmaster. Buy comparison, San Francisco-based Ticketfly sold 16 million tickets in 2014 to 90,000 events for a value of more than $500 million in transactions. Ticketmaster processed 450 million tickets with a transactional value of $23 billion last year.

And with Ticketmaster having such a dominant position in the concert ticketing market, analyst Richard Greenfield, of BTIG questioned Pandora's rationale for wanting to buy Ticketfly. Greenfield estimates that Ticketfly has negative earnings, with $35 million in revenue during the first half of the year.

"It's very hard to see why this is a proper use of capital by Pandora," Greenfield said, in a research post. "Ticketing is a really hard business that appears to have significant risk for Pandora, [because] Pandora will be going up against a giant in Ticketmaster/Live Nation, and have no experience in ticketing or venue relationships."

Read more:

That historical strength of Ticketmaster will certainly play a part in Pandora's efforts to make concert ticketing a successful part of its business. 

"The ticketing business is kind of like the Middle East. It's where empires go to die," said Richard Tullo, of Albert Fried & Co. "If you squeak out 5% to 10% net income margins in ticketing, you're doing great."

For Pandora, the deal is meant to connect Ticketfly's ticketing operations with its base of almost 80 million monthly active users, who listened to 5.3 billion hours worth of music on the Pandora service during the second quarter. Pandora said the two companies would use their data to create new tools that musicians can use to increase sales and reach listeners.

"This positions us to solve one of music's long-standing challenges: helping people discover live music experiences they'll love," said Pandora Chief Executive Brian McAndrews, in a statement e-mailed to The Street. "The fact is that 40% of tickets today go unsold, and together we'll be a powerful force to meaningfully change that."

Ticketfly is seen as operating at a loss for Pandora for the near-term, according to Mark Mahoney, of RBC Capital Markets, who still views the deal as a helping Pandora expand its business opportunities.

"Overall, this acquisition is more of a bolt-on business rather than a game changer," Mahaney said, in a research note.

But getting into a new industry dominated by a company with decades of experience nevertheless has left investors concerned about Pandora's direction, and what it deal may say about its long-standing Internet radio service.

"The question is are they [Pandora] signaling that Internet music isn't going to grow any more, or are they just preparing for a new area of growth?" Tullo, of Albert Fried & Co. "They may have felt they needed to do this deal now, as opposed to later when it might be harder to move and operate."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.