There is good and bad news for Pandora today. The streaming radio leader has for the first time found itself in a position to compete for radio advertisers on an equal footing thanks to its inclusion in an influential ratings network run by Strata Marketing. The potential in the streaming radio market has brought new competition.
It's worth noting the news recently broke that Apple has held talks with Beats Electronics LLC about collaboration and/or investment in a music service called Daisy – apparently these talks go back a decade but Steve Jobs wasn’t ready to act when they began. Although Apple hasn’t been announced as an investor in the deal, Daisy has just secured $50M from a group including Warner Music owner Len Blavatnik, Fort Worth billionaire Lee M. Bass, and Australian financier James Packer.
Although the service may not be called Daisy when it launches officially it does seem to be based on technology developed by a company Dr. Dre purchased called MOG.
To make matters more interesting, it seems YouTube also will have a streaming service which of course will compete with Google Play (which is celebrating its first birthday with its new name). Does Google need two music services? Some speculate the reason has to do with coercing music owners to keep the free versions of their music on the world’s most popular video sharing service.
What does all this mean? Simply that the internet is going to continue to put massive pressure on terrestrial radio and the amount of choice in the market will in-turn benefit consumers tremendously. In order for these companies to compete they will have to innovate as margins are already razor-thin. Advertisers will have more choice than ever and the market is likely to become somewhat more fragmented.
Apple’s role in streaming music will be interesting to watch as just about everyone else has now launched at least on music service. Remember they picked up streaming service LaLa in 2009 for $80M meaning they are theoretically planning an entry into the space. Can they differentiate theirs somehow by embedding it into iOS more seamlessly than the other market choices? Think about what they've done with their mapping service which is the default when you ask Siri for directions. This sort of integration may make sense but it seems really late for Cupertino to act without being considered a major copycat at this point.