As reported by New York Times and many other news sources, Apple will be launching a Pandora competitor within the next few months. While Pandora already has many streaming Internet radio competitors, with the likes of Slacker and iHeartRadio, and other music listening platform competitors like Spotify and rdio, Apple is the behemoth that could put Pandora in a shaky situation.
Pandora’s stock dropped nearly 17% at the news, Hypebot mentions. This comes at a time when Pandora is still having trouble reaching profitability, as its spending is tied heavily to current regulation that requires a payment for radio streams to record labels and other sources that seems to prevent it from being in the black.
While Pandora expects to turn a profit sometime in the coming year or two, the allure of switching to an Apple product might be too great for some and could stifle Pandora’s growth. With the upcoming iPhone 5 release, and the design-focused company that is Apple, consumers will soon have a choice between what service they want to use and how tied it will be to the device in their pocket.
Is this time for Pandora to panic? Perhaps not, considering so many consumers’ daily office experience is related to the customized radio stations Pandora offers them, catered directly to their tastes. Many companies know that the switching costs of leaving a service that knows so much about you to a competing service is high. What that new service has to offer must be 10 times better than the old service, otherwise most are too lazy to switch. Who cares if Bing is better or worse than Google—we’re used to Google and we’re going to keep going to that homepage or using that Google search toolbar until some cathartic experience with a new search engine causes us to switch.
However, if Apple provides a service that seamlessly ties into your devices, whether it be through the all-too-familiar iTunes, iPod, or iPhone, it’s going to turn a few eyebrows. Apple will easily bring the fanboys and fangirls on board, but will they have the music discovery ability to snatch away a growing Pandora userbase? We’ll have to grab some popcorn (and our nicest earbuds) and wait to see.