Will This New Service Hurt Pandora or Sirius XM?

Will This New Service Hurt Pandora or Sirius XM?

The suddenly crowded streaming music space is about to lose some more elbow room.

Beats Music -- the development-stage digital radio platform that was spun off by Dr. Dre's Beats Electronics -- will launch next month. It was borne out of the acquisition of fledgling music site MOG last year, and the technologies and licenses have been beefed up behind the scenes over the past year in anticipation of what is now slated as next month's launch.

What should set Beats Music apart from other offerings is the star appeal. It's not just Dr. Dre. Trent Reznor is its chief creative officer, and the chatter has it that music celebrities will be curating many of the available playlists.

Pandora and to a lesser extent Sirius XM Radio may want to start weighing the potential threat posed by Beats Music. Both companies have been able to grow despite the growing number of competitors in the past. However, both companies have shown signs of mortality since the mid-September launch of Apple's iTunes Radio.

Apple's ad-supported streaming service was enough to serve more than 1 billion tunes to 20 million unique listeners during its first five weeks on the market. Is it a coincidence that Pandora served fewer unique listeners in October and then November than it did in September? Is it a coincidence that Sirius XM's guidance calls for subscribers to decline during the current quarter for the first time in more than three years?

These are trick rhetorical questions. Pandora's usage has declined since peaking in September, but it's serving more hours of content now than it was back then. As for Sirius XM, its guidance does imply a sequential dip in total subscribers, but self-paying accounts -- what ultimately matters -- are expected to grow nicely.

Both companies -- and even Apple -- still can't ignore Beats Music. Until we know what Beats Music's product will be or how its pricing strategy will play out, it's impossible to weigh its impact in this suddenly crowded niche.

Things are getting interesting as the beat -- and Beats Music -- goes on.

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The article Will This New Service Hurt Pandora or Sirius XM? originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Pandora Media and owns shares of Sirius XM Radio. It recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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