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What happens when somebody out-Pandoras Pandora (NYSE: P ) ?
The music-discovery website is still growing quickly, even though the stock got clobbered last week after the company issued guidance calling for a sequential dip in revenue and a wider deficit than analysts were targeting for all of 2012.
However, what if the sequential dip in revenue isn't just a seasonal thing? What if Pandora's popularity is starting to peak?
The cult of popularity
I fired up my Kindle Fire this morning to see the ranked list of music apps. Pandora didn't win, place, or show.
The top app is Clear Channel's (OTC: CCMO) iHeartRadio. The free streaming app provides online access to hundreds of the terrestrial giant's real stations. It also introduced customized radio along the lines of Pandora.
TuneIn Radio is next. This is an aggregator of a ton of AM and FM content, along with popular podcasts and access to BBC, NPR, and other national broadcasts. We're talking about 50,000 stations and 120,000 shows! You can seek out your favorite audio shows and see which stations are playing them. Folks arguing that Sirius XM Radio's (Nasdaq: SIRI ) biggest threat is Pandora are missing the point. Satellite radio isn't just about music -- as Pandora obviously is. It's far-reaching aggregators like TuneIn that should be in Sirius XM's crosshairs because they offer a complete gamut of sports, news, talk, comedy, and music (with commercial interruptions, of course) for free to any smartphone owner.
The third hottest music app request on Kindle Fire tablets is the one by music video licensing giant Vevo.
Pandora? Squint your eyes and you'll see it clock in fifth.
Now, this doesn't mean that Pandora is the fifth most used music app on Kindle Fire. Obviously a ton of buyers were downloading the program when the Kindle Fire hit the market late last year. Users just like to gravitate to new things. However, the ranked list is indicative of how things are trending for new owners.
App Store to the rescue
Things look markedly better for Pandora's trend on the App Store. It is the top dog right now. However, if you check out the premium applications leader board you'll find TuneIn Radio Pro -- a $0.99 version of the free app that adds DVR-like functionality to record shows or pause and rewind streams -- is the second most popular program that folks are actually willing to pay for.
There's obviously a new level of engagement and commitment once money is exchanged, something that Pandora has discovered to be a hard sell since the vast majority of its users are freeloaders.
Now, one can also argue that TuneIn Radio Pro is a threat to Sirius XM as well. It offers many of the features that Sirius XM has been pitching in its Sirius XM 2.0 platform that has been slow to take off.
However, Sirius XM will always have an audience of radio buffs that can appreciate the simplicity of reliable premium content from coast to coast. More cars are making it easier for drivers with smartphones to stream Pandora, TuneIn, and iHeartRadio through their dashboards, but they're always at the whims of carrier coverage.
It also doesn't help that the big boys are installing data meters.
Throttling those engines
AT&T (NYSE: T ) and Verizon (NYSE: VZ ) were the biggest beneficiaries of the smartphone revolution, offering unlimited data plans to the first few waves of buyers to keep them connected to one of the country's two largest wireless carriers.
They stopped offering unlimited data plans to new accounts, but now they're going after the folks that were grandfathered in to the more generous cybersurfing smorgasbords.
AT&T has been advising its most active users that it will throttle their speeds -- in a nutshell, slow them down dramatically -- once they hit certain levels of data consumption in any given month.
Streaming audio isn't as big a data sipper as video but it does add up for folks who rely on Pandora for their daily commutes. One would think that that would be Pandora's biggest nightmare -- or at the very least what keeps Sirius XM in good shape -- but really, it's nimble competition that will ultimately show if and when Pandora peaks in popularity.
Even if it's not happening now, it pays to -- dare I say -- tune in.
Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.
XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report reveals all.