Or, not. Pandora’s high flying stock seems to have stalled a bit as investors digest the impact of Apple’s iTunes Radio on Pandora’s market. In short, it’s a mixed bag of facts and truth and what PR does best for a company– hide the visible problems.
Gaining While Losing
Pandora has been the darling of internet radio for a few years with a stock that has moved into rarified air, despite an absence of profits.
Apple is the 800-pound gorilla in the music world, and the company’s latest venture, iTunes Radio, has had an enormous impact on Pandora’s business model.
So, why hasn’t Pandora’s stock tanked?
It depends on what you mean by impact. Despite a few months of iTunes Radio, Pandora’s listening hours are up, and total share of internet radio is up.
Up is good, right? Apparently, iTunes Radio isn’t having much of an impact on Pandora. Or, is it? Pandora’s active monthly number of listeners has declined by 2-million since iTunes Radio hit the market.
That’s an impact, right?
The key numbers keeping Pandora’s stock in underserved rarified air is listenership. Pandora’s remaining listeners are hard core, listening more. Since stock market investors don’t dig into the nitty gritty much, they’re happy with more listening rather than more listeners. It’s not a subtle difference.
Apple hasn’t released much information about iTunes Radio’s performance other than to say about 11-million people tried the new ad supported service after it launched. Silence is not golden, but clearly something is impacting Pandora’s listener numbers, and iTunes Radio is the only new kid on the block.
I’m a believer in the Bell curve, and it’s easily applied to Pandora’s business and predicament. Pandora has plenty of sold, dependable, hard core listeners on one end, casual listeners with little loyalty on the other (and a mass in the middle of the audience Bell curve).
Apple’s iTunes took Pandora’s casual listeners, those with less loyalty, hence Pandora’s listener numbers went down by 2-million, which is bad news that investors are ignoring. The remaining listeners are the ones who listen to Pandora the most, hence Pandora’s listening numbers went up, the good news that investors use to keep the stock propped up.
Pandora’s public mantra appears to be a repeat of Alfred E. Neuman’s famous ‘What, Me Worry?‘ line, and that attitude doesn’t bode well for the future.