Apple Inc. (AAPL) Hasn’t Killed Pandora Media Inc (P) Yet

How do you like them apples, Pandora Media Inc (NYSE:P) investors?

Shares of the leading music-streaming service tumbled 11% yesterday after reports surfaced that Apple Inc. (NASDAQ:AAPL) was just one handshake away from rolling out its own rival music platform.

If I had a dime for every time that Pandora Media Inc (NYSE:P)’s stock took a hit on rumors of Apple introducing a competing service, I’d have nearly a dollar. The latest hit comes courtesy of reports that Apple has finalized negotiations with Warner Music, leaving just one of the major record labels to go.

Apple Inc. (NASDAQ:AAPL)’s iRadio is coming — and the announcement may come as soon as next week’s Apple WWDC powwow — but we’ve known that since last year. Why don’t we wait until it actually launches and succeeds before handing the streaming crows to Apple?

Apple Inc. (NASDAQ:AAPL) certainly commands respect when it comes to digital music, but let’s not assume that it’s going to be a winner just because Apple’s iTunes Music Store is the leading seller of downloads. Being the top dog in music retail didn’t help when Ping — Apple’s short-lived social music experiment — flopped.

Not everything Apple touches turns to iGold.

However, Pandora Media Inc (NYSE:P) isn’t necessarily doomed if iRadio is embraced by earbud-donning music fans. Spotify, Sirius XM Radio Inc (NASDAQ:SIRI), and Pandora have all posted spectacular growth over the years in the face of growing competition.

There will come an inevitable shakeout, but it’s hard to picture Pandora being the first to go. For that to happen, Apple Inc. (NASDAQ:AAPL) would have to set its sights on iRadio as a free service, and that doesn’t seem likely.

Apple charges $25 a year for iTunes Match, a service that allows cloud-based access to your music library. After selling music and only offering a premium streaming platform, would iRadio really be a hub for freeloaders?

Pandora Media Inc (NYSE:P) is exactly that. Just 2.5 million of Pandora Media Inc (NYSE:P)’s more than 70 million active monthly listeners are premium subscribers. That’s a stark contrast to Sirius XM Radio Inc (NASDAQ:SIRI) and Spotify, which rely largely on subscription revenue to stay in business. Apple launching a free service would mean diving into the audio advertising business, and that’s just not the tech titan’s strong suit.