Apple Gives Pandora Good Reason to Panic
Word has it that Apple is developing a Pandora-like service to be included as an additional offering for the iOS ecosystem. If this comes to fruition, analysts agree that it would be a real boon for Apple -- and a death blow to Pandora.
On Apple's side of the equation, this is a plan that makes a lot of sense. Thanks to its well-established iTunes ecosystem, Apple already has pre-existing relationships with many of the record labels. When it comes to the often-tenuous negotiations process surrounding license agreements, Apple has a built-in head start. As for good reason to expand and diversify its music services, look no further than the rise of other platforms in competition with Apple's iTunes -- namely the Google Play music store/manager and Amazon's MP3 store/player.
As for Pandora, the future looks grim if Apple does indeed follow through with a similar service of its own. Not only does much of Pandora's usage come from mobile devices (a huge proportion being Apple-produced iPhones and iPads), but this also highlights the problems of Pandora's inherently weak model. Not only is it overly mobile-reliant, but much revenue also derives from advertising, despite the subscription element.
Ad-based models are challenging in and of themselves -- add the biggest player in tech flexing its muscles in your space, and Pandora probably doesn't stand much of a chance. With Apple more invincible than ever, investors are looking for fresh recommendations on how to play the stock. For this reason, we've created a brand-new report that details everything you need to know, along with continuing updates and guidance on the company whenever news breaks. To get started, just click here now.
The article Apple Gives Pandora Good Reason to Panic originally appeared on Fool.com.Andrew Tonner owns shares of Apple. You can follow Andrew and all his writing on Twitter: @Andrew Tonner. Brendan Byrnes owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, and Google. Motley Fool newsletter services recommend Amazon.com, Apple, and Google. 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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