Can iTunes Radio Take on Pandora and Spotify?

Steve Jobs said subscription-based music services would never catch on. People wanted to own their music, he reasoned, and therefore services like the then-fledgling Rhapsody would never become big business.

But with streaming music apps like Spotify now boasting millions of subscribers, Jobs' assessment was obviously flawed. Of course, he made that argument a decade ago -- before the proliferation of widespread, high-speed wireless Internet.

Apple's (NASDAQ: AAPL  ) own attempt at streaming music, iTunes Radio, stays true to Jobs' vision of the music business. It emphasizes ownership over a monthly subscription, but still fits within the general framework of the industry's delivery of digital music via the Internet. How does it stack up against the competition?

iTunes Radio: Just a Pandora clone?
Of all the services out there, iTunes Radio is most similar to Pandora (NYSE: P  ) . They are largely indistinguishable from each other at their cores, as both are centered around Internet radio: Users create personalized "radio" stations based off individual artists or tracks. But to be fair, they aren't exactly clones -- there are some important differences.

As its name implies, iTunes Radio is just a part of Apple's larger music application iTunes and, thus, it isn't surprising that it picks songs to play based largely on the music within one's library. When I asked Siri to play me Marilyn Manson Radio, it simply appeared to be going through my existing iTunes catalog at first.

That might good or bad depending on what you're aiming to do, and here iTunes Radio aims to help listeners with its arguably most novel feature: the ability to switch among three different modes -- from discovery (new music) to hits (more popular songs), to a combination of the two. Should you like what you're listening to, it's mind-numbingly easy to purchase currently playing songs -- simply press a button in the corner.

Like Pandora, there are a few ads interspersed between individual songs, but it's chear to get rid of them. An annual subscription to iTunes Match costs just $25, while Pandora Premiere is $36 per year.

Obviously, there's one big distinction between iTunes Radio and Pandora: distribution. Apple's service is completely unavailable on Android devices. So, Android owners looking for an Internet Radio solution really have no choice but to stick with Pandora.

At the same time, not all iOS-device owners might want to make the jump. I really didn't notice a major difference between the music iTunes Radio recommended to me and the tracks Pandora suggested, but some have, and you might prefer one algorithm over the other.

Spotify gives you total access to an enormous catalog of songs
In contrast to Pandora and iTunes Radio, Spotify bills itself on offering a catalog of on-demand music. As Pandora's management has emphasized emphatically in recent months, the two business models are radically different. For those looking to play any track they want at any time, Spotify is truly the way to go -- for a monthly fee, subscribers get ad-free access to Spotify's catalog of some 20 million songs. (Or users can sit through commercials with Spotify's free version.)

And unlike iTunes Radio and Pandora, a Spotify subscriber isn't hamstrung by skip limits or the need to listen within the framework of created stations. If you hear that catchy new track on the radio, you can start playing it instantly -- and listen to it again and again, if you so choose.

Of course, there are still reasons why even a Spotify subscriber might have a need for a service like Pandora or iTunes Radio. Although Spotify does have some radio functionality, it isn't the service's focal point, and thus, those looking to discover new music, or simply let the computer pick out some tracks to play, might prefer to use an Internet Radio option.

Google goes the Spotify route
Google
's (NASDAQ: GOOGL  ) take on digital music is the diametric opposite of Apple's. While the iPhone-maker has chosen to basically blend Pandora functionality into its music application, the search giant has gone the opposite route, merging Spotify's model into its own.

Like iTunes, Google Music acts as Google's music gateway -- an application for users to access their music, either in the form of digital downloads purchased directly through Google, or files uploaded to Google's cloud.

By buying the All Access pass, Google Music gains functionality, giving users access to a library of millions of songs, just like Spotify. But Google's catalog is weaker than Spotify's, lacking notable bands like Metallica (a high-profile signing for Spotify last year). Still, given that the app is native to Android, users locked into Google's ecosystem may still prefer Google's service over Spotify's.

And like Spotify, it also has Internet Radio functionality, but again, it isn't the primary focus, and it is lacking at best. As a subscriber, I don't use the service for its radio station creation ability, but if I did, I probably would've already cancelled -- the pool of songs Google Music picks seems limited, with just a handful of the same artists played ad nauseam on every station.

Music distribution continues to evolve
Few industries have been as affected by the Internet as the music industry. Digital downloads replaced physical media purchases years ago, and now the proliferation of Internet-connected mobile devices is shaking up music distribution once again.

It's quite possible that music-heads could find themselves regularly using several of these services: iTunes Radio or Pandora when it comes to music discovery and variety; Spotify or Google Music All Access to play any song they want, anytime they want.

At any rate, one thing is certain: listeners now have more options than ever before to satisfy their musical needs.

No Pitch


Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 01, 2013, at 2:14 PM, ronbero wrote:

    I love Apple. I spent $100's (ok - probably $1,000's) on iTunes. Then I realized that with Spotify - beyond the listening functionality - it comes with a download functionality. To me - that is the key. for $10 (or $11 or ?) per month, I am effectively renting albums for as long as I like in the form of offline play lists. Why would I want to buy from iTunes anymore ?

  • Report this Comment On October 01, 2013, at 3:05 PM, skyisfalling wrote:

    I really did not get any about the marketing part in this. Which stock should I chose, GOOG, SPOTIFY, P or AAPL. Please help people like me.

  • Report this Comment On October 01, 2013, at 3:51 PM, instabash wrote:

    sky don't choose anything.. markets are rigged.... youll lose either way..

  • Report this Comment On October 01, 2013, at 10:12 PM, monk1324 wrote:

    I am a musician.I have listened to both Pandora and Itunes radio and compared them since Itunes radio became available.

    1.I tunes has a larger selection but the stations I set up-Bob Dylan, Bill Evans,Miles Davis and Mississippi John Hurt-the tunes selected regardless of the setting has little in common with the name of the radio I set up.This makes me turn it off.

    2.Pandora-the algorithm is clear far superior (I dont think Itunes radio has one,or if it does it works badly)-but the sound quality is lower, and the repeats are more frequent.

    Surprisingly I prefer the ads on Pandora more, as the iTunes radio ads promote music I would never listen to, and often have little to do with the station I set up.

    That is my experience.

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