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Pandora investors aren’t thrilled with the news that technology giant Apple might be launching its own music-streaming service.
At the time of publication, Pandora’s stock is down nearly 18 percent today. Previously, the stock price remained relatively consistent despite tons of competition from the likes of Spotify, Rdio, Rhapsody, and many others. But Apple would be a far greater threat than Pandora’s other competitors if rumors of its music service plans prove true.
With Pandora, you create customized “radio” stations based on an artist, song, album, or genre by voting on what they do and don’t want to hear. The company offers a free ad-supported version of its smart radio service as well as premium subscription-based version. And while the company posted record high revenue numbers in its latest quarterly report, the expenses related to music licensing prevents it from turning a profit.
And Pandora is far from the only streaming finding it hard to make money. Spotify is also struggling to make a return on its free, ad-supported tier of service. Also, we’ve yet to see a success story from a streaming music service business, which Apple now wants a piece of.
Pandora’s investors are understandably shaken by the news, especially because Apple likely knows the uphill battle it’ll face making its own rumored music service a financial success. Some speculate that Apple’s true intentions are to keep consumers using the iPad and iPhone. A handful of hardware manufacturers are already offering a subscription-based music service, including Samsung, Sony, and (soon) Microsoft’s Xbox. So Apple (somewhat understandably) may want to join in.
P data by YCharts