Pandora Media Inc (P), Google Inc (GOOG), Sirius XM Radio Inc (SIRI) & More: Investing in Your Music Choice

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Free has Worked Before

I stand by the “no free lunch” mentality and know that everything comes with some kind of external or indirect cost, but I can Google something right now and the size of my wallet doesn’t change. This behemoth takes ad revenue to a new level, generating over $43 billion in 2012. If a website is used widely enough and continues to innovate, profits will flow. Instead of forming partnerships and depending on others for growth, Google Inc (NASDAQ:GOOG) keeps much of its revenue in-house, holding steady at around 68% from Google websites for three years.

Google Inc (NASDAQ:GOOG) averaged over 5 billion searches per day in 2012, but from Android development to YouTube progression, the company knows no limits. With cash flow at over $13 billion in 2012, shareholders anticipate a dividend at some point. Because of that potential and market demand, shares are not cheap at 25 times earnings, but Google is dominating more than ever because of continued innovation.

No-Brainer

The subjects may differ, but when it comes to using the internet, one would never pay to search something. Premium music experiences offer fantastic services but have proven difficult to sustain as the history of Sirius XM Radio Inc (NASDAQ:SIRI)demonstrates. Websites always come with above-average risk for the long term, but innovation fuels continued success.

Kyle Vaughan has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google Inc (NASDAQ:GOOG).

The article Investing in Your Music Choice originally appeared on Fool.com.

Kyle 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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