Despite the looming threat of Apple's (AAPL 0.64%) iTunes Radio, incumbent music streamer Pandora (P) isn't scared. CNET recently interviewed CFO Mike Herring, and while Herring acknowledges that Apple is a heavyweight to take seriously, he feels confident that Pandora is still the best at what it does.
Apple's potential expansion into international markets could also put more heat on Pandora. Apple can do this because it has struck direct licensing deals with record labels, which gives it more reach. However, Pandora points to other rivals such as Spotify that have similar deals -- and the red ink that they generate. The big difference is that Apple doesn't need iTunes Radio to be a profit center, while Pandora certainly does.
Herring also takes the opportunity to discuss rates throughout the music industry, highlighting the very notable differences in what companies pay based on what medium they use. In Pandora's case, Internet services pay the highest rates and also pay per play, while satellite services pay as a percentage of revenue and broadcast radio pays nothing. Apple also falls into the first category.
In this segment of Tech Teardown, Erin Kennedy discusses Pandora and Apple with Evan Niu, CFA.
