Pandora Media Inc (NYSE:P) reports quarterly results tomorrow, and the market is generally excited.
Shares of the leading music streaming service hit a two-year high yesterday, and a couple of analysts have issued bullish reports in recent days. Those pros don’t wax optimistic with a quarterly report around the corner unless they’re comfortable that the dot-com darling can come through with a strong performance. They see Pandora Media Inc (NYSE:P) returning to profitability on a 54% top-line pop.
Everything seems to be going well for Pandora Media Inc (NYSE:P), but things are far from perfect. Growth is decelerating, the average user is listening less, and then we have Apple Inc. (NASDAQ:AAPL) crashing the party.
We’re now just weeks away from the inevitable rollout of iTunes Radio, and Apple Inc. (NASDAQ:AAPL)’s starting to generate some buzz.
Ad Age is covering the major advertisers that are hopping onto Apple Inc. (NASDAQ:AAPL)’s platform ahead of its launch next month. Mickey D’s, Pepsi, and other major brands are paying in the “high single-digit millions of dollars to tens of millions of dollars” for a 12-month campaign that will feature industry exclusivity for the sponsors through the end of 2013.
According to the sources, users will have to put up with an audio ad every 15 minutes, and a video ad every hour. There will also be “slate” interactive display ads that take over the screen.
Apple Inc. (NASDAQ:AAPL) does offer a cheaper path for listeners to have an ad-free experience, but it’s now becoming clear why the arrival of iTunes Radio may be the best thing that ever happened to Pandora Media Inc (NYSE:P).
Pandora Media Inc (NYSE:P) may have served a whopping 1.28 billion hours of content to 71.2 million active users last month, but it has lost money through the first half of the year because it’s not making enough from advertisers to offset its growing royalties and operating costs. Apple Inc. (NASDAQ:AAPL)’s arrival validates music streaming as a marketing platform, and it won’t be a surprise to find brands paying far more to reach Pandora’s larger base in the future.
Another point to warm the hearts of Pandora Media Inc (NYSE:P) bulls is that Apple’s hoping that introducing iTunes Radio will help breathe new life into stagnant digital music sales. It may be too late for that — we’ve become a nation of streamers — but if that works for Apple Inc. (NASDAQ:AAPL), it follows that Pandora will also stand to benefit. In short, Apple is educating marketers and consumers, getting sponsors to pay more, and listeners to spend more.
If that’s the case on either front, iTunes Radio may be the best thing to happen to Pandora since the smartphone.
The article Pandora Isn’t Afraid of Apple originally appeared on Fool.com and is written by Rick Munarriz.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.