Pandora's Getting the Last Laugh on Apple

Pandora  (NYSE: P  ) seems to be doing a good job of standing up to the arrival of Apple's (NASDAQ: AAPL  ) iTunes Radio.

Pandora put out encouraging metrics for the month of November this morning. It served up 1.49 billion hours of content, up 17% from the 1.27 billion hours it delivered a year earlier. Pandora's unique listeners have risen 16% over the past year to 72.4 million. However, savvy investors know better than to rely on Pandora's year-over-year performances. Apple introduced iTunes Radio in mid-September, providing owners of the growing number of portable iOS devices easy access to free ad-supported streams in Pandora-esque fashion.

Apple turned heads by initially revealing that 11 million listeners had flocked to the service during its first week; a month later, Apple was claiming to have served up a billion tunes to 20 million listeners. Apple's rookie success likely caused Pandora investors to start gnawing away at their fingernails, and things didn't get any easier when Pandora posted a sequential decline in active listeners for the month of October.

After attracting 72.7 million listeners in September, just 70.9 million folks fired up Pandora in the first full month of competing against iTunes Radio. The silver lining then was that at least the amount of content being consumed rose sequentially, even accounting for the extra day in October. Thankfully, we're seeing sequential improvement on both metrics for November. Pandora now accounts for a record 8.44% of all U.S. radio listening, and that's a ringing endorsement for the audio-streaming platform.

Pandora bears looking to nitpick will be quick to point out that November's unique listeners still clocked in lower than September's tally. That's true, but instead of worrying about where 1.8 million listeners went between September and October, we now have just a net decline of 0.3 million users during the past two months. Is the market expanding, or did some of the people abandoning Pandora to check out iTunes Radio come back?

The important metric is ultimately that the actual content consumed continues to rise -- listener hours have gone from 1.36 billion in September to 1.49 billion last month -- at a time when Pandora is getting better at monetizing its streams. Revenue in Pandora's latest quarter soared 50% despite a mere 17% increase in usage. 

Naturally, investors will want to keep a close eye on the metrics that Pandora graciously provides on a monthly basis. You aren't likely to see Apple offer up this kind of insight, so we're down to seeing if the world of options weighs on Pandora's service in any given month. For now, Pandora's holding up just fine against Apple -- and the rest of the world.

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Read/Post Comments (6) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On December 04, 2013, at 2:37 PM, skyisfalling wrote:

    Be 100% honest, what about P's P/E ratio!

  • Report this Comment On December 04, 2013, at 2:41 PM, JAVKO wrote:

    As you put it:

    Apple claims...!

    Pandora confirms...!

    What kind of journalism are you preaching?

  • Report this Comment On December 04, 2013, at 2:44 PM, Thompr97 wrote:

    But my understanding is that sometime in the last couple of months, Pandora raised the listening hour cap on its "free" users. If true, his alone may explain how the number of user listening hours increased while the number of users did not.

    It would also call into question your thesis here, i.e. the metric that you acknowledge is most important may be raised only artificially.

  • Report this Comment On December 04, 2013, at 2:46 PM, johnestromjr wrote:

    Rick, "the last laugh"? Hardly. Apple has just barely started up their iRadio system and I'm sure they will want to continue to improve it as they continue to update and improve everything else Apple. The good news for the consumer is that as competition increases so does the quality of the service and we also get a better price. So I would thank both for offering an increasingly better experience rather than saying that Pandora has the "last laugh" as surely they don't. This is only the beginning for both but I suspect Apple WILL want to become the dominant of the two and they have a way of doing just that.

  • Report this Comment On December 04, 2013, at 3:01 PM, ranchrfl wrote:

    I listen to both. There are subtle differences in the music between them when you use the same artist to build your station off. I pay from Pandora and I use iTunes Match so both are ad free. If I was worried about $3.99/mo I'd be ok dropping Pandora but I'm not so I keep both.

  • Report this Comment On December 04, 2013, at 4:53 PM, ab8130 wrote:

    Apparently Pandora doesnt work in many countries overseas and iRadio does.

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