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Apple's iTunes Radio is 'credible threat,' says Pandora CFO

post #1 of 44
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In a Monday interview, Pandora finance chief Mike Herring talked about the impact Apple's recently-released iTunes Radio will have on rival internet radio services and iTunes's effect on the wider music industry.



Just over eight years after launch, streaming radio service Pandora boasts some 72 million monthly active users in the United States, Australia, and New Zealand. Apple's iTunes radio gained more than 15 percent of that total only 11 days after its September launch, a "credible threat" which Pandora takes "very seriously," the company's CFO told CNET.

Herring said that Pandora is accustomed to fending off competition from larger players --?calling out Microsoft, Google, Apple, and Twitter --?and feels the service is well-positioned in the market because the company "does [internet radio] better than anybody else."

"The most recent entrants have all been large, well-funded companies that have agendas outside a really awesome music experience," he said, holding up hardware or digital download sales as examples of competitors' divergent interests. "We sell downloads, but the priority isn't to sell as many downloads as possible. It's emblematic of the difference."

Apple's iTunes Radio is marketed by Cupertino as a tentpole feature of the new iOS 7 mobile operating system, while Google similarly features Google Play Music All Access in its Android advertising. Both offerings, however, can also be accessed on cross-platform desktop players.

While defending the royalty fees Pandora pays to artists --?a common point of contention between the company and the music industry --?Herring shifted some of the blame for music labels' unwillingness to negotiate to Apple, saying that iTunes's domination of music sales has made industry executives gun shy.

"First you had the piracy issues," Herring said, before iTunes "disintermediated the entire CD business, which was detrimental. There's difficulty for people who have experienced these negative things to listen to reason."

As noted by CNET, Apple pays higher royalties for songs on iTunes Radio than Pandora does on its service, since Apple has agreements in place directly with the labels while Pandora pays only statutorily-mandated rates, similar to performance royalties paid when a song is used in a commercial.

Herring also expressed Pandora's desire to expand internationally --?Apple is said to be targeting more than 40 countries for iTunes Radio --?but noted that "there is nothing short-term for an international opportunity."

"What we're trying to do in Australia and New Zealand is...to prove to the world that Pandora's entrance into the market with the right rates structures is incredibly positive for the music industry in that region," he said.
post #2 of 44
iTunes is a credible threat? Uhm... yeah, it sure as hell is. After trying iTunes Radio for about 10 minutes when it first debuted, I dumped Pandora like a bad habit. I was prepared to subscribe to Pandora and pay their subscription, then waited to see what Apple was up to.

Pandora's days are numbered if they don't step up and do something. Right now, iTunes Radio is just way too convenient.
post #3 of 44

It's refreshing to hear a CEO of a competing company actually say Apple is going to be a threat instead of the normal buffoons who say they won't succeed.  

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post #4 of 44
Quote:
Originally Posted by sflocal View Post

iTunes is a credible threat? Uhm... yeah, it sure as hell is. After trying iTunes Radio for about 10 minutes when it first debuted, I dumped Pandora like a bad habit. I was prepared to subscribe to Pandora and pay their subscription, then waited to see what Apple was up to.

Pandora's days are numbered if they don't step up and do something. Right now, iTunes Radio is just way too convenient.

Agreed! Now is the time for them to make some tweaks...but what really can they do? I'll be the first to say that iTunes Radio does have some quirks that I don't particularly care for, but that will only get better with time once more and more data has been collected from listening habits. Plus iterating is what Apple does. 
 

But the convenience aspect far outweighs any current shortcomings that iTunes Radio poses.

post #5 of 44
Quote:
Originally Posted by TechManMike View Post
 

I'll be the first to say that iTunes Radio does have some quirks that I don't particularly care for, 

I'm still getting ads and I pay for iTunes Match.  Curious as to why or if anyone else is getting the same?  I don't use iTunes match on my phone, however.

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post #6 of 44
These other services are screwed as they are trying to get to a point where they make a profit. Apple don't even have to, it's a loss leader for Apple hardware and to reinforce the eco system, although it will no doubt, ironically, make billions in a few years like everything else Apple does.
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post #7 of 44

@ Tim Cook   P stock is up :lol:   Can you say Samsung is a threat? :p 

 

Also waiting to see GOOG rips AH today :err:   edit- I mean tomorrow!


Edited by helicopterben - 10/16/13 at 1:03pm
post #8 of 44
If Pandora redesigned it's app for iOS 7, that would help a little. As it is now, it's ugly. Having a number of stations and trying to scroll them on an iPad is not possible, before and after iOS 7.
post #9 of 44
Yes, glad to see he is honest and didn't use the typical "they're not a threat, they're just validating our business model" line that CEOs use to describe new competition.

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post #10 of 44
Apple is doomed. Wait. Wrong thread. Pandora is doomed.

Jokes aside,pandora does have an uphill battle. I dumped them as soon as iRadio came out.
post #11 of 44
Apple should certainly be able to monetize iTunes Radio a lot better than Pandora however Pandora stock is up over 150% YTD and Apple, well, less than zero YTD. I'm getting the feeling that iTunes Radio revenue won't add anything to Apple's bottom line. It may only be worthwhile as a service that will gradually pull in more consumers to Apple hardware.

I like listening to iTunes Radio but I wouldn't say it's that much better than when I used Internet Radio channels in the older versions of iTunes. I'm not passing judgment for at least six months and we'll see how well Apple develops the service. I've had iTR glitches where the music would just stop playing after a while for no reason I can discern. I'd have to restart the station manually. I'm getting a nice mix of music and it's free. I don't mind those short ads at all. I don't have iTunes Match but it's rather inexpensive and I may get it in the future. I wasn't expecting a lot and I'm satisfied with what I'm getting. It's a hell of a lot better than when I was growing up having to listen to top 40 music stations on the radio.
post #12 of 44
Quote:
Originally Posted by Andysol View Post
 

I'm still getting ads and I pay for iTunes Match.  Curious as to why or if anyone else is getting the same?  I don't use iTunes match on my phone, however.

per the apple support site, you have to turn iTunes match on to remove the ads.  

 

http://support.apple.com/kb/TS5181

post #13 of 44

Yups. Pandora was the first thing to go once I installed 7. Nothing personal.

post #14 of 44
Mike Herring should change his name to Red.

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"Apple should pull the plug on the iPhone."

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post #15 of 44
Quote:
Originally Posted by Andysol View Post

I'm still getting ads and I pay for iTunes Match.  Curious as to why or if anyone else is getting the same?  I don't use iTunes match on my phone, however.

I've never heard an ad.
post #16 of 44
Quote:
Originally Posted by Andysol View Post
 

I'm still getting ads and I pay for iTunes Match.  Curious as to why or if anyone else is getting the same?  I don't use iTunes match on my phone, however.

 

Yes, it is a pain to be required to have iTunes Match turned on to remove ads.  They need to be separated.  Time for http://www.apple.com/feedback/

post #17 of 44
I've used pandora for a long time. Tried apple, but honestly it isn't as good. So many songs come up I don't like that each time it hit don't play on this station again in out of clicks and have to listen to crappy songs. Plus, apple doesn't find as many songs as I like which pandora does a great job on. Sorry apple, I resigned up w pandora again.
post #18 of 44
Pandora is exactly like Netscape - a first mover app whose capability was absorbed into the platforms... And it will face the same future: shrinking subscribers and revenue and a falling stock price, until it is bought by a third tier player for cheap. Its current $5 billion market cap is insane - P is a stock that is begging to be shorted...
post #19 of 44
iTunes Radio is pretty good as is. I still do not understand why it does not show the song as purchased...this causes duplication of songs if you don't recall if you purchased or not. Or in my case if the wife bought it the day before...
post #20 of 44
Quote:
Originally Posted by DCGOO View Post

Yes, it is a pain to be required to have iTunes Match turned on to remove ads.  They need to be separated.  Time for http://www.apple.com/feedback/

Just did it- thanks!

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post #21 of 44
We have Pandora here in the office, and I have it on my iPhone. I'm getting tired of listening to the same assortment of songs on the couple of stations I listen to. Has anyone listened long enough on iTunes Radio to discern whether the assortment is large enough for a particular station to not get bored? I would have to think Apple has way more tunes under license than Pandora, by virtue of its catalog, but would like to know for sure.
post #22 of 44
Quote:
Originally Posted by TechManMike View Post
 

Agreed! Now is the time for them to make some tweaks...but what really can they do? I'll be the first to say that iTunes Radio does have some quirks that I don't particularly care for, but that will only get better with time once more and more data has been collected from listening habits. Plus iterating is what Apple does. 
 

But the convenience aspect far outweighs any current shortcomings that iTunes Radio poses.


Agreed.  iTunes Radio does have quirks, but it's only v1.0 and I'm patient.

On my late 2009 iMac, I get ads/commericial in iTunes, but on my MBA I get an error message dialogue box saying the quicktime format is not supported in my version of iTunes, which is weird because both my systems have the same current release of iTunes.

Occasionally iTunes Radio will stall, to which I resolve by simply selecting a different station.  Minor annoyances that I'm sure Apple will resolve, if they haven't yet on a future release.
 

post #23 of 44
Quote:
Originally Posted by Bagman View Post

We have Pandora here in the office, and I have it on my iPhone. I'm getting tired of listening to the same assortment of songs on the couple of stations I listen to. Has anyone listened long enough on iTunes Radio to discern whether the assortment is large enough for a particular station to not get bored? I would have to think Apple has way more tunes under license than Pandora, by virtue of its catalog, but would like to know for sure.

Given that you make new stations in a few seconds I doubt there is much of a problem. If it starts to happen just make a new similar one by artist or song.
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post #24 of 44

iTunes is a little too late to the game in my opinion, my familiy and I all use and are very happy with Spotify, it runs on all of my OS platforms that I currently have; OSX, iOS, Windows, Android, and Linux. I spent a very long time making my playlists and subscriptions, plus the best thing is my kids have free premium access and I got 2 years through our mobile provider so iTunes would have to offer something pretty substantial for me to change. Which won't be the case as Apple historically doesn't give out any such free offerings. I also got 50GB of BOX storage for two years with my phone and it uploads and downloads at least 3 - 4 times faster than my iCloud account does on my iPad. I think that has something to do with Switzerland though.


Edited by Relic - 10/16/13 at 3:04pm
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post #25 of 44
Quote:
Originally Posted by Andysol View Post

It's refreshing to hear a CEO of a competing company actually say Apple is going to be a threat instead of the normal buffoons who say they won't succeed.  

What difference does it make?
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post #26 of 44
Originally Posted by dasanman69 View Post
What difference does it make?

 

What difference does the truth make? 

Originally posted by Relic

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Originally posted by Relic

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post #27 of 44
Quote:
Originally Posted by Tallest Skil View Post

What difference does the truth make?

Just goes to show that it's easier to question than be questioned. One loses their honor and integrity once they become a politician, but it's irrelevant to the fact of what the Pandora CEO said. Will it change the outcome?
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post #28 of 44
Pandora can go suck it.

Always hear about Pandora constantly and I'm in the UK, they haven't bothered to expand internationally for years, they have done nothing at all and now Apple is going to destroy them and then expand internationally where Pandora were too lazy to do so. I hope they die.
post #29 of 44
Quote:
Originally Posted by skleiniv View Post

I've used pandora for a long time. Tried apple, but honestly it isn't as good. So many songs come up I don't like that each time it hit don't play on this station again in out of clicks and have to listen to crappy songs. Plus, apple doesn't find as many songs as I like which pandora does a great job on. Sorry apple, I resigned up w pandora again.

I have only a few of Apple's stations on my iTunes Radio and I have been tuning those stations consistently. At this point I rarely need to select "Never Play This Again". 

 

Do you create your own stations from artists or albums you love? You can do that and also add related artists, tracks, and albums to the staion to "tune" it better to your liking. You also can tune any station by selecting either "Hits", "Variety" or "Discovery".

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post #30 of 44
Originally Posted by dasanman69 View Post
Will it change the outcome?

 

“Will telling the truth about something change its outcome”; THIS is your question. I’m seriously questioning whether you actually mean this, and that’s depressing.

Originally posted by Relic

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Originally posted by Relic

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post #31 of 44
Quote:
Originally Posted by Tallest Skil View Post

“Will telling the truth about something change its outcome”; THIS is your question. I’m seriously questioning whether you actually mean this, and that’s depressing.

In this case it won't.
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post #32 of 44
Translation: "We're scared shitless."
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post #33 of 44
The only problem I'm having - and having consistently - is that my Diana Krall Radio always (I mean ALWAYS) plays Christmas music.

It starts out fine, and then takes a left turn into Christmas music and never turns back. I can't skip all of them because I run out of skips. To be fair they are all jazz/standard Christmas songs...but in September/October that's not what I'm looking for. And this has never happened on either Pandora or Spotify. ;-)

So that's my only gripe, but it's an issue that I *assume* will be mitigated with more thorough tagging in the future.
post #34 of 44
They (Pandora!) started business in 2000.

13 years later, these morons couldn't bring their service to any country other than U.S. (obviously!), Australia and New Zealand!

13 damn years?!!!

From their site: http://www.pandora.com/restricted

"We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative."

My friend, the alternative is here already!

Apple just announced it and truly have been working diligently to bring it to many many countries and for real!

And, now look at their CFO's pic! He's been peeing in his pants since he heard iRadio is coming! I'd suggest Pandora shut it down and refund their users and NOW!

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....the lack of properly optimized apps is one of the reasons "why the experience on Android tablets is so crappy".

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post #35 of 44

There is no iTunes for Android, right?  Android is on more phones, so Pandora has a protected market to a certain extent.

 

Amazon and Netflix can play content on Android and iOS.

 

Why can't iTunes/Apple play music content on Android?

post #36 of 44
Quote:
Originally Posted by Ken_sanders_aia View Post

Pandora is exactly like Netscape - a first mover app whose capability was absorbed into the platforms... And it will face the same future: shrinking subscribers and revenue and a falling stock price, until it is bought by a third tier player for cheap. Its current $5 billion market cap is insane - P is a stock that is begging to be shorted...


AOL bought Netscape for $4.2 billion

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post #37 of 44

I already deleted Pandora...not looking back.

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Apple increments product features one bite at a time...hence the logo. Want the next big thing? You're gonna have to pick another fruit from the Apple Tree.

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post #38 of 44
I wanted to like iTunes Radio at launch, but it had some annoying bugs that turned me off. When it did function I didn't feel like it understood my tastes like Pandora does. Some of the song choices on my channels weren't stellar. Top it off with a less ubiquitous ways to access the service compared to Pandora and I'll stick to where I'm at.
post #39 of 44

iTunes radio is the best there is, great selection- endless. i can dump XM for the automobiles ,and not have to use pandoras crappy sounding mp3s in my vehicle anymore also.Their mp3s must be 128 or worse...

iTunes songs have the best sound quality (short of my hi-res tracks) . CD sound good but are too cumbersome. They are obsolete IMHO

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post #40 of 44
Quote:
Originally Posted by TinkerTenor View Post

The only problem I'm having - and having consistently - is that my Diana Krall Radio always (I mean ALWAYS) plays Christmas music.

It starts out fine, and then takes a left turn into Christmas music and never turns back. I can't skip all of them because I run out of skips. To be fair they are all jazz/standard Christmas songs...but in September/October that's not what I'm looking for. And this has never happened on either Pandora or Spotify. ;-)

So that's my only gripe, but it's an issue that I *assume* will be mitigated with more thorough tagging in the future.

Have you tried training rather than skipping?
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