At its Worldwide Developers Conference, Apple Inc. (NASDAQ:AAPL) made it very clear that they believe they are innovative. They released information regarding their new online streaming radio service, iTunes Radio. It offers many of the same services as the oldest and most successful online radio service Pandora Media Inc (NYSE:P), but is it any better? Let’s take a look at what this service offers, how it will effect competition, and what may surprise some people.
What is it?
The service works similarly to Pandora’s, with a few more specific features. For instance, the demo showed options on songs such as, “Never play this song again” and “Play more songs like this.” While these features are nice, they certainly are not earth shattering breakthroughs. Because of its ties to iTunes, you also have the option to buy whatever song you are listening to just by clicking a buy option at the top right hand corner.
One thing that may surprise people is the lack of subscription fees for the service. Instead of following in the footsteps of Google Inc (NASDAQ:GOOG) and charging a monthly fee of $7.99, Apple Inc. (NASDAQ:AAPL)’s iTunes Radio services will be free. Google Play Music All Access does offer commercial free radio, playlists, and streaming of your favorite songs for all subscribers. Apple’s service will offer the same basic set-up, allowing specific songs, playlists, or stations.
This release is likely to increase competition to a whole new level for this branch of business. Apple seems to have a good start because of its faithful users in every other area. If Apple Inc. (NASDAQ:AAPL) offers a new service, they are bound to immediately have millions of users. Both Apple and Google Inc (NASDAQ:GOOG) have music stores and cash to invest. This again seems to present them with an upper hand against Pandora. Pandora, however, seems to have paved the way for these other companies. Neither Google Inc (NASDAQ:GOOG) or Apple Inc. (NASDAQ:AAPL) have done anything to seriously set their radio services apart.
Pandora Media Inc (NYSE:P) needs to do something that will allow it to stay relevant. The most obvious solution is to become the most personalized online radio service available. If they can engage their users in personalizing their favorite music, they could continue to be the industry leaders.
Pandora Media Inc (NYSE:P) is a much younger company than either Google or Apple Inc. (NASDAQ:AAPL), but it has performed far better than some might have expected. Apple’s stock has experienced rough times over the past year, but they are the only ones (of the three companies) paying dividends. In the past year, Google’s shareholders have seen more growth than either of the other two, but Pandora is a close second.
Whether it be a soaring stock or the announcement of $100 billion being returned to Apple’s shareholders by 2015, each of these companies offers its own opportunity. Pandora Media Inc (NYSE:P) has performed well, but it hasn’t had much competition prior to this year. How they respond to this new competition will likely determine their relevance in the future.
I know Apple and Google fans won’t like my perspective on this issue, but that’s ok. I think in this case the only company of the three to actually innovate is Pandora Media Inc (NYSE:P). Yes, Apple Inc. (NASDAQ:AAPL) had some fancy looking products with its Mac Pro presentation, and this is a little more innovative than what we have seen out of them recently, but in regards to radio, what have they done besides copy? The same is true of Google. They might have Google Glass and other new products in the pipeline, but we have seen nothing new in the music industry. Kudos to Pandora for rolling these types of services out.
The Foolish bottom line
New products, new ideas, and new customers is what drives these types of companies. Pandora Media Inc (NYSE:P) is young but has done well so far. Apple Inc. (NASDAQ:AAPL) and Google have huge user bases and are looking to capture even more of the market with their radio services. Again, it will be interesting to see how it plays out, but the winner will likely be the company that offers the best personalized music services to its customers.
The article Apple’s Pandora-like Services originally appeared on Fool.com and is written by Tyler Wofford.
Tyler Wofford has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Tyler is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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