Apple's (AAPL 1.19%) mid-September launch of iTunes Radio was seen more as a threat to Pandora (P) than to Sirius XM Radio (SIRI 2.43%), but that may be about to change. Apple's streaming radio platform is about to take a newsy bent, as Re/code is reporting that National Public Radio will be the first news station on iTunes Radio.
Re/code says that there are "more on the way," suggesting that Apple's about to beef up the spoken, non-music content on iTunes Radio.
The arrival of iTunes Radio wasn't supposed to have an immediate impact, but Pandora has gone on to post sequential declines in usage in two of the six months since its launch. Sirius XM experienced a dip in total subscribers during the fourth quarter, but that masked a healthy sequential increase in the more important self-pay subscriber metric.
The moral of the story until this point is that there is enough market share to go around. Pandora and Sirius XM continue to reach broader audiences despite the stateside arrival of Spotify in the summer of 2011 and tech giants throwing their hats into this niche over the past two years. However, since Apple's iTunes is the golden standard of listening and purchasing digital music, the introduction of iTunes Radio six months ago is something that couldn't be ignored.
As a free, ad-supported music discovery platform, Sirius XM didn't have a lot to worry about. Its music channels are commercial-free, and it also offers a wide range of talk, sports, and news content that often stars some pretty magnetic radio legends. Pandora's move to add comedy three years ago was smart, but Sirius XM continued to post subscriber increases every quarter until this past holiday quarter (and Sirius XM's guidance calls for it to resume its winning ways right away).
Right now, it may not be such a big deal. Sirius XM does offer NPR Now, but it's not just Apple's iTunes Radio offering a free stream that mixes live news with pre-recorded shows. NPR is available for free online, so it's not as if it's the one thing keeping Sirius XM subscribers as paying active listeners. The real challenge here will come in what Apple iTunes Radio offers next. If radio personalities begin to flock to Apple's nascent yet popular iTunes Radio, it could pose threats to terrestrial radio operators and possibly even Sirius XM. When you pair up the broadening content on iTunes Radio with its CarPlay initiative to get its technology in more cars, it's hard to dismiss Apple here.
Sirius XM can still continue to thrive if Apple is successful, but it'd better hope that iTunes Radio doesn't become too successful.