Please ensure Javascript is enabled for purposes of website accessibility

Pandora Owners Shouldn't Fear Twitter's New Service

By Anders Bylund - Apr 12, 2013 at 3:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Twitter's new music service is pretty far down the list of things that should worry Pandora investors.

Shares of digital music specialist Pandora Media (P) have taken a plunge today, dipping as low as 3%.

The catalyst for this minor panic? Instant-messaging expert Twitter confirmed that it bought out privately held song-recommendation service We Are Hunted and will launch its own music service in the near future.

Music lovers already have a plethora of choices to manage their playlists and media libraries. However, Twitter's service gets uncomfortably close to Pandora's special sauce. We Are Hunted recommends songs and builds playlists based on your personal preferences and listening habits, much like Pandora's vaunted Music Genome database.

But it's not a wholesale replacement for Pandora. This service seems focused on building better playlists from material you already own or can find for free online. It's not likely to expand your musical universe much. But that's exactly what Pandora does.

If I want to hear something that I already know and love, I fire up Spotify or my favorite MP3-playing app, pick a few tunes for the moment, and off we go. Apple can do this with its "smart playlists" in iTunes. Spotify has plugins for the same functionality. Even the oft-forgotten Google Music service offers an "instant mix" option to build playlists around the musical features of favorite songs.

This is the crowded space that Twitter will barge into. It's not at all a head-to-head collision with Pandora.

Pandora is for those times when I want something new. About half of my current MP3 library is built around stuff I stumbled across on Pandora. Sure, you can focus a Pandora station around handfuls of known favorites, but you'll still be served the occasional mind-blowing choice out of left field. I'm into trance music now due to a surprising Ferry Corsten remix of a pop-rock tune.

So Twitter's service may seem similar to Pandora, but it actually caters to a very different need. As far as I'm concerned, Pandora still doesn't have any serious rivals. The only current threat to this fantastic company is the financial pressure of sky-high royalty rates, which may put Pandora out of business regardless of its customer appeal. But that's not what today's drop is about.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Pandora Media, Inc. Stock Quote
Pandora Media, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.