The Pandora Killer No One Saw Coming


Pandora (NYS: P) knows its competition well.

The leading music streaming website -- serving up a monthly average of 1.1 billion hours of audio to its 54.9 million users -- knows that last year's stateside arrival of overseas favorite Spotify can't be ignored. Sirius XM Radio (NAS: SIRI) may have half as many subscribers, but they are premium accounts that could warm up to the satellite radio giant's streaming Pandora-like offering rolling out later this year.

App stores are always brimming with flavors of the week. TuneIn Radio and Songza are just a couple of the free streaming applications perched high on lists of most downloaded apps.

However, did anyone really see Nokia (NYS: NOK) coming?

Yes, Nokia.

The Finnish handset maker introduced a free music streaming service yesterday.

Nokia Music will be exclusive to Lumia smartphones. Lumia is the flagship line of phones powered by Microsoft's (NAS: MSFT) Windows Phone mobile operating system.

There are currently 150 playlists, perpetually curated by musicologists. That's a shot at Sirius XM's commercial-free music channels. However, Nokia Music also has a "CREATE" function where playlists are generated from a library of millions of tracks inspired by artists that they love. That is the shot at Pandora.

Nokia Music is ad-free. There's no registration to fill out. Sure, you have to shell out big bucks to AT&T (NYS: T) if you have the Lumia 900 or T-Mobile if you have the Lumia 710, but smartphone users streaming Pandora are probably doing that already.

Pandora's stock shrugged off the news; the shares closed higher yesterday. Yes, Nokia Lumia owners may be inclined to rely on Nokia Music as their top source for streaming instead of putting up with ads on the free version of Pandora, but the market apparently feels that this is too small a market to worry about.

We'll see. Nokia isn't the tastemaker that it used to be when the world was fine with old school feature phones, but what happens when Android and iPhone owners begin expecting similar perks? The two companies behind those platforms have pretty popular digital music platforms, you know.

Nokia may be a small player these days in smartphone features, but it may have raised the bar in a way that is harmful to Pandora's model.

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