Pandora vs. iTunes Radio, who will win?

Tom Dougherty, CEO – Stealing Share

20 November 2013

Predictions of the demise of Pandora were premature

Who do you listen to: iTunes Radio, Pandora or Spotify?

Here’s my guess: You listen to a mix of all of them.

The launch of iTunes Radio more than a month ago produced calls for the demise of Pandora, simply because everything Apple touches is magic and it would have an captive audience that runs its iOS7 software.

“When it comes to consumer-oriented service technology like this, users are usually not wedded to just one. We live in a world in which choice rules the day.”

My feeling all along as been that Pandora (and, to a lesser extent, Spotify) would weather the storm. That’s because those online radio applications are much like the streaming services on your TV. Netflix may be the leader, but I’ll bet many of you also have Hulu Plus and Amazon Instant Video. (Not to mention the TV networks’ own apps, such as HBO GO.)

So far, that theory has been proven to be true. Pandora reported an increase in revenue of 51% with market share increasing from 6.6% to 8.06% in radio.

PandoraNow, it’s only been a month and iTunes Radio said last month that it has reached 20 million in September and the numbers could continue to grow.

But, when it comes to consumer-oriented service technology like this, users are usually not wedded to just one. We live in a world in which choice rules the day.

The real competition for Pandora and iTunes Radio is not each other. It’s all the other ways in which we listen to music. Whether it’s downloading a song, listening to a local radio station or even playing a CD (does anyone do that anymore?), the online services have greater inroads to make than simply taking away each other’s customers.

There will be continued shifting, however, that may produce a new market leader. My point is that the predictions of Pandora’s demise are shortsighted. The world is wide open – as long as the brands themselves remain meaningful and relevant. Pandora and Apple are, which means the grab for market share is a long-term affair.

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