What if Apple Put Out a Music App and Nobody Streamed?
Apple finally rolled out iTunes Radio yesterday, but nobody seems to care.
The same nervous jitters that used to rattle shares of Pandora at every whiff of Apple nearing entry into its streaming hotbed are nowhere to be found. Shares of Pandora hit a new all-time high this morning. Sirius XM Radio is also at a new five-year high today. The satellite radio provider is not necessarily as susceptible to the streaming attack, but it's still in the crosshairs as well-to-do iPhone owners now have a mobile streaming app built into iOS 7 that they can easily access in connected cars.
Are Pandora and Sirius XM investors gluttons for punishment, or is the iTunes Radio launch not that big of a deal?
Well, let's go over the limitations of iTunes Radio.
For starters, the new platform is initially limited to computers, Apple TV, and iOS devices. Streaming -- like radio -- is largely a mobile indulgence, so let's set aside the Apple TV set-top boxes and computers. There's a reason why Spotify costs twice as much if you want to access the streaming service on mobile devices. There's a reason why the two times that Pandora has tried to cap free usage has been on the mobile end. This leaves us with iPads, iPhones, and iPod touch devices, and just so we're clear here Apple is selling fewer iPad tablets and iPods than it was a year ago.
Google's Android is the mobile operating system of choice for smartphone owners, commanding roughly 80% of the market. Apple's share over the past year has declined from 17% to 13%.
Now, let's be fair. There are plenty of streaming apps available on Android that haven't gained traction. That's not the point. Apple is limiting its potential audience right out of the gate, and that's going to restrict its audience. Whether or not this limits the potential advertisers, this is going to be a big win for Pandora after Apple legitimizes sponsoring music streams and more marketers turn their attention to market leader Pandora.
Finally, Apple doesn't have the same advantages here that it did in rolling out the iTunes Music Store a decade ago. Back then, Apple was able to exploit a market that was ripe for disruption. The major labels were teaming up in creating restrictive digital music services in Pressplay and MusicNet. Fearing what the digital music revolution and rampant online piracy would do to their falling CD sales, the labels created unusable platforms that PC World eventually cited among the 25 worst tech products of all time. It also only helped that Apple had put out the iPod two years earlier, making it the undisputed leader in portable media players.
Apple is missing all of those advantages today. There are plenty of perfectly serviceable streaming apps on the market. Sirius XM has more than 25 million satisfied premium radio customers, and Pandora is drawing more than 70 million active listeners a month. There is little in iTunes Radio that is disruptive, just as there is no inherent need in the market for a disruptor.
This doesn't mean iTunes Radio will be a flop in the way that Ping -- Apple's short-lived social music platform -- faltered. There's just little to make it a threat to Pandora or Sirius XM.
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The article What if Apple Put Out a Music App and Nobody Streamed? originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, and Pandora Media. The Motley Fool owns shares of 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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