Apple's (NASDAQ: AAPL ) launch of iTunes Radio put the company squarely in Pandora's (NYSE: P ) playing field. But even after the iTunes Radio announcement, Pandora's stock continued to soar upwards, gaining about 70% since June. Now, Apple is planning to expand internationally. Is there any hope for Pandora at these new highs?
Though Pandora may have pioneered streaming radio, that's no reason to believe the company can hold its own against Apple. When it comes to music, Apple has considerable power. Given that it revolutionized the MP3 player market with iPod and launched iTunes -- turning it into the world's largest digital music store -- Apple knows a few things about music.
Even before Apple's iTunes Radio was officially launched, Apple was already a threat to Pandora. Pandora's 72.7 million active listeners paled in comparison to Apple's 575 million iTunes accounts linked to credit cards. Even worse, Apple is paying more per song to record labels than Pandora plus it will pay them a percentage of ad revenue (a perk Pandora doesn't provide), according to the The Wall Street Journal.
Since the launch, Apple has only proven its dominating ways. Apple announced that iTunes Radio snatched up 11 million unique listeners just five days after the September launch. It's worth noting that Pandora's monthly audience metrics seemed unaffected by iTunes Radio in September, with active users continuing to grow, but iTunes Radio wasn't available for more than half of September.
The last we heard from Pandora, the company wasn't concerned about Apple's iTunes Radio. Indeed, there's plenty of room for Pandora to grow despite Apple -- Pandora accounted for just 7.77% of total U.S. radio listening in September -- but Apple's expanding presence in streaming music and the company's existing iTunes infrastructure could snuff out many of Pandora's growth opportunities. Apple's latest move, in particular, looks like it's directly intended to do just this.
Apple is planning to launch iTunes Radio in the U.K., Canada, Australia, New Zealand, and Nordic countries by early 2014, according to Bloomberg. The move would put iTunes Radio well ahead of Pandora. Two of those markets (Australia and New Zealand) account for Pandora's only international markets.
And this is just the beginning of Apple's international expansion. Apple Senior Vice President Eddy Cue told the Associated Press last week that Apple plans to bring iTunes Radio to more than 100 countries. Apple can move more swiftly than Pandora, since Pandora deals with government entities for music rights while Apple leans on its agreements with record labels.
I've yet to see an argument for Pandora stock with Apple in the ring. But I'd love to hear an intelligent case for Pandora in the comments below -- if anyone has one. So far, evidence continues to suggest that Apple will be tough competition to Pandora.
What do you think? With Apple entering every one of Pandora's markets and aggressively expanding well beyond Pandora's reach, is there any hope for Pandora's stock at today's forward-looking price?
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