7 Reasons Why Apple’s “Pandora Killer” May Actually Be a “Pandora Killer”…

Updated: Apple has now disclosed that iTunes Radio will launch on Wednesday, September 18th.

‘Pandora killers’ come and go, but there’s good reason to regard Apple’s iTunes Radio (aka ‘iRadio‘) as an extremely dangerous, earth-scorching threat that will destroy all things.  That is, possibly starting as early as today (Tuesday), according to some floating rumors.

So, be very afraid?  According to NPD Group researcher Russ Crupnick, the iTunes-integrated app has several enormous advantages over its nearest rival.

1. iTunes Is Very Massive.

NPD estimates that 67 million consumers have used iTunes in the past three months alone.

2. iTunes Store Downloading Is Also Massive.

According to NPD data, 1 out of 3 iTunes users report purchasing a download from the store — either an album or an individual track.

3. Radio Usage Among iTunes Users Is Also Massive.

Nearly half (48 percent) of iTunes users who bought a music download from iTunes in the past three months also listen to Pandora, Spotify, or other internet radio or an on-demand music service.

4. They Already Love Streaming.

More than half (53 percent) of US web users age 13 and older reported using a video service for music, such as YouTube or Vevo.

5. iTunes Users Love Pandora…

Pandora is the most popular radio service among active iTunes users: 42 percent of iTunes users also use Pandora.

6. iTunes Users Already Love iRadio.

35 percent of iTunes users expressed interest in trying a radio service offered by iTunes.

Note: These users were provided a description of an iTunes radio service similar to the anticipated iTunes Radio application.

7. It’s Free.

The key appeal of the service, mentioned by 51 percent of iTunes users, was the fact that it was free.  And in a battle of free versus free, guess who wins?

Bonus: For Crupnick’s 5 reasons why iRadio isn’t necessarily a Pandora Killer, see comments below…

Image by Pilgrim on Wheels, licensed under Creative Commons Attribution ShareAlike 2.0 Generic.

20 Responses

  1. brian
    brian

    It will have to be really good if it doesn’t want to end up in the “too little, too late” file.

    • Avatar
      DudeNoDude

      Yeah Right! Battle of too late…Ha!

      Apple is gonna wipe the floor with one long green stream…

      Who you gonna call?

  2. Benji Rogers
    Benji Rogers

    Not that I go for the “killer” thing but don’t forget in app heirarchy! i.e. when you ask Siri to play a song it will choose iTunes first. i.e. it’s not going to hit up a third party app from the outset.

    If Siri goes to desktop then you simply say: Play Song and it will start playing. The user won’t care where from…

    “Make Station from this song” won’t go anywhere but to itunes…

    Right?

  3. Here Let Me Research It For Yo
    Here Let Me Research It For Yo

    This blog post has pretty lazy insights. Here’s a better take:

    1. Tight Integration with Streaming and Purchased Music.

    Source: Anthony Mullen, a senior analyst at Forrester Research, said that even though the new service was just released, Apple already has a head start with its iTunes store. “A really tight integration between streaming and purchased music is something the iRadio competitors can’t match and that surely will be an advantage for Apple,” Mullen wrote in an email before the product’s official name was announced. [Huffington Post ]

    2. Pandora Hasn’t Continued to Innovate Upon Their Radio Product.

    Source: The new radio capabilities are likely to push Pandora to more innovation, Sinnreich says: “I love Pandora. It’s a pioneering service. Their software works well. But they’ve been dominant so long that they haven’t really progressed, in terms of making their service more sophisticated. Having Apple is going to kick Pandora to greater good.” [Rolling Stone]

    3. Apple Will Have Exclusive Music Releases From Major Artists.

    Source: As the world’s most popular music store, iTunes has access to thousands of new songs every week. And you’ll hear some of that music on iTunes Radio before you hear it anywhere else. Whether it’s an exclusive track from an up-and-coming band or a pre-release of the next big hit, iTunes Radio has you covered. [Apple]

    Commentary: “Now, fans will have another reason to try iTunes Radio — at least during the brief period of time when a track or pre-release album they are dying to hear is only available for streaming there. Whether they stick around is anybody’s guess, but at least they’ll show up.” [Evolver.fm]

    4. 575 Million iTunes Accounts, Most With Credit Cards and 1-Click Buy.

    Source: Apple has some important advantages. The company has sold 600 million iOS devices globally that can run the Internet radio app. It has 575 million iTunes accounts, most with credit cards and one-click buying, and a 63% share of the paid download market (in the fourth quarter), according to NPD Group. The incremental revenue from downloads will bring an additional dimension to a type of service that has historically struggled to attain profitability. [Billboard]

    5. Apple Could Hook an Older Demographic on Music Streaming.

    Source: “Apple’s iTunes Radio, unveiled Monday, looks very similar to other music-streaming services. But the details that set it apart — exclusive song offerings, links with the iTunes store and Apple’s signature design — could help hook an older demographic on music streaming and lure others away from existing services. [ WSJ]

    6. Direct Integration with iOS 7, Siri Commands, and iTunes Buying.

    Source: “The fact that iTunes Radio is baked directly into iOS 7 gives it some additional advantages. You can use it with Siri, literally calling up your favorite station or asking Siri to hear music similar to your favorite artist. Airtight integration with iTunes also makes it snap to purchase any currently playing song — a feature that I’m sure both Apple and labels are thrilled by.” [CNET]

    7. Apple Will Have Leg Up In Targeting Users with Ad Products.

    Source: “Several agency executives believe iTunes Radio’s ad products will have a leg up in targeting over Pandora and Spotify due to the amount of data they already know about their users. Served though iAd, iTunes Radio ads will allow brands to more accurately target customers based on location. iTunes Radio will also allow marketers the opportunity to target consumers based upon what TV shows, movies and apps they’ve downloaded via iTunes.” [Adage]

    • FarePlay
      FarePlay

      Impressive. Number 3 with the ability to stream to direct download sale with a huge installed base of existing user cc accounts could very well be the game changer.

      If Apple can support greater product sale through streaming this is the artist friendly way to go.

      The biggest disconnect all along with digital radio has been the lack of reasonable compensation for artists, who really do need to make a living if we are going to keep the pipeline full of great material.

      The Internet makes nothing, it is simply the pipeline.

  4. Ryan Glaspell
    Ryan Glaspell

    Although general, a very cool, and convincing, argument for the predicted dominance of iRadio. Pandora has had to fight off so many competitors (iHeart Radio, Last.fm, Spotify Radio, etc.), and so far it’s done great. Releasing iRadio may be the Goliath to face off against, however.

    The one thing Apple has going against it, however, is its exclusivity. Will iRadio be available for Android? Will they expand their library to independent artists and remixes that aren’t currently available through their store? I imagine it’d be difficult to get Android lackeys to jump ship and join iRadio.

    I also wonder if iRadio will actually be a Pandora killer, even if it’s successful. The amount of online radio services available aren’t hindering Pandora. If a competitor comes out, will it mean the end for Pandora, or will it give them the competitive push to stay cool and relevant?

    Ryan Glaspell

    [email protected]

    RyanGlaspell.Wordpress.com

    • Casey
      Casey

      Not just android, but Windows Phone, Blackberry, dashboards in automobiles, set-top boxes & smart tvs, etc. Pandora is integrated into nearly everything. Apple likes to keep everything exclusive as possible. Short of Apple doing the same thing, Pandora will continue to be the leader simply because of the massive amount of people unable to use iRadio.

      Another thing to keep in mind is the web player. Does iRadio have a web player? From what I have heard, it is not planned. That means iRadio will have little to no pentration in the work place, because few network admins will allow people to install software such as iTunes. The office work place is a tremendous source of listeners for Pandora. By not having a web player, it also prevents those who don’t have iTunes installed by preference or can’t install the latest version (Linux, anyone with an old OS X version) from listening.

      Pandora currently has no reason to lose sleep.

  5. Toy Needle
    Toy Needle

    Apple’s “algorithm” for Radio is the same as Genius, essentially Genre and Year. If you like radio wallpaper you’ll love Apple Radio. If you like interesting variety you’ll stick with Pandora.

    • Cliff Baldwin
      Cliff Baldwin

      Radio listenership usually comes down to whether the music and station is any good. Has anyone done a taste test yet between iradio and Pandora stations? If you put in the number one selling artist or song on the charts, what do you get? If you put in classic rock artists like Dylan or the beatles whats the result? Enquiring minds wanto know!

  6. Corey Tate - www.spacelab.tv
    Corey Tate - www.spacelab.tv

    ITunes Radio is another classic example of Apple doing what it does best, which is not innovation. It’s entering a market at the moment of mass adoption, its tipping point. Think iPod and iPhone, those markets were around for years before Apple got into them.

    Apple doesn’t waste time on slow build services, they get in when the gettin’s good. It’s only history rewriting itself to say that Apple innovated a new market niche.

  7. Paul Resnikoff
    Paul Resnikoff

    And now, for the other side. Russ emailed me this morning, with reasons why Pandora might be just fine (note, Digital Music News came up with the “Pandora Killer” title and theme, which may have unfairly editorialized NPD’s opinion on the matter…)

    “I was intrigued by the “Pandora Killer” angle, enough to think about the other side of the story. I’m not taking sides but there are some real barriers that Pandora has erected, so to go along with the 7 reasons iTunes Radio is a Pandora killer, here are 5 reasons why Pandora will be perfectly fine…

    1. Pandora has a very loyal and satisfied customer base.

    3 out of 4 rate the service as being Excellent or Very Good which is class leading, along with Spotify. 9 out of 10 listeners would recommend the service.

    2. Pandora has the strongest awareness of any radio service…by far.

    60% of internet users know about Pandora, which is nearly double that of the #2 service. More importantly HALF of those who know about Pandora used the service in the past 3 months, which is 4 times the usage rate of the next service. So if you think about the question of “would you use this service”, already half the people who know about Pandora regularly say “yes I would”.

    3. Pandora is rapidly challenging AM/FM for top share of music listening hours among it’s users.

    4. 60% of Pandora users don’t use iTunes for music.

    Yes, certainly the 40% who do represent millions of potential listeners but there are a lot of folks who simply use Pandora without doing iTunes downloads and interest in iTunes Radio is less among non-downloaders.

    5. One in four Pandora users regularly use an Android mobile phone.

    22% of iTunes users regularly use an Android phone- so they may use iTunes on the PC/MAC or tablet, but the most mobile device is sometimes a non-iOS phone.

  8. Yves Villeneuve
    Yves Villeneuve

    Essentially, online radio may be capped at around 42%-50% of Internet users. This could be the biggest takeaway from these stats mentioned in the article and in comments.

    The last Pandora report in August showed 54 listening hours per active user in last 3 months. 36 minutes per day per active user.

  9. Avatar
    Too Late

    Seems way too late. Digital radio is dead as a stand alone, combined with a streaming service like Spotify, it makes more sense these days. I know you guys hate Spotify because of artist payouts, but the point is that it’s still a desireable value added service for music consumers.

    Apple knows that iTunes is a cash cow right now and it’s not a sustainable revenue generating service for them (sustainable as in a few years down the road streaming services will become more popular, as who wants to pay $9.99 per album when the same price per month gives you unlimited albums to stream?). The argument many people without foresight will use is the same one we’ve been hearing, “but I want to OWN my music so I can put it on my ipod or burn cd’s for my car”. That’s irrelevant down the road as mobile streaming will be easily linked to your car. Bluetooth connectiviity is already standard in new cars and they’ll have kits you can install in old cars very soon (if they don’t already).

    So, Apple releasing iRadio is rather foolish, unless they plan on making another large announcement over the next year or so that loops in iRadio with something bigger and better. Don’t be surprised if Apple makes a bid to purchase Spotify or become the largest shareholder. That means they’d have to buy shares from the music industry, which means the business comes full circle. Apple originally screwed the music industry because of the frantic reaction of the industry to get digital tracks out there, and now Apple will have to pay them back to maintain relevance. It’s kind of funny, actually.