Tim Westergren: “iTunes Radio Will Only Have a Modest Impact…”

After just three days, iTunes Radio has 11 million unique listeners.

 

After more than 8 years, Pandora has 72 million active listeners.

 

At the current adoption rate, iTunes Radio will be just as big as Pandora after one month.

 

Pandora’s shares just sank more than 10 percent.

 

The iTunes Radio product, despite being just launched, is already superior, with fewer and less intrusive ads, a cleaner interface, broader recommendation options, and a far better download integration.

 

iTunes Radio is guaranteed better access to more exclusive content for years to come, thanks to directly-licensed deals with each major label.

 

Apple, one of the richest companies on the planet, can afford those deals and outspend Pandora every time.  Meanwhile, Pandora is bleeding money, quarter-after-quarter with questionable long-term prospects.

 

Apple is generally well-regarded within the music industry.  Pandora is at war – and hated – not only by many of those labels, but by the broader artist, recording, and publishing communities.

 

Apple doesn’t have to spend endless hours in court or on Capitol Hill lobbying for government subsidies to survive.  In fact, Apple doesn’t really care if iTunes Radio is even profitable or not.

 

iTunes itself has 575 million users, of which more than 67 million have checked in over the past 30 days alone.

 

Apple could shut off Pandora on iOS whenever it wants.

 

18 Responses

  1. Me

    Also, iTunes Radio has a much bigger catalog, and it is much easier for smaller artists to get their music on there. It takes months to get an album approved and processed by Pandora. Meanwhile, the same album can be available on iTunes almost immediately through iTunes Connect or in a matter of a couple of days through a digital aggregator.

  2. Visitor

    “Pandora’s shares just sank more than 10 percent”

    Haha, awesome!

  3. really?

    How can Apple “shut down” Pandora on iOS at any time it pleases?

    • JT

      Umm. I’m not an antitrust lawyer but since Apple owns iOS, I assume it can unilaterally decide to pull it from its walled garden…

      • Adam

        Correct, they can yank it any time they want and have done that to other apps before (not music apps that I know of yet.) Not saying they will do that or have any reason to, I think Apple knows there would be some serious backlash from Pandora supporters. Apple seems more interested in outdoing them from a more legit business standpoint – better catalog, better user interface, more marketing, more $$. People still seem to like Westergren and Pandora still has lots of supporters. However, they are clearly trying to pay out as little money as possible. From a business standpoint it “makes sense” to them on the short term. The rest of us can see right through it. He’s a real hypocrite and all the information is really out there for you to read about all over the internet. Basic facts point to him being a guy who is looking out for himself now, no matter what his original goal was. From the fire-selling of stock to the “petition” trying to get artists to bilk themselves out of their last source of income from recordings, this guy is transparently supporting Pandora and not artists. If he really had anything to offer, the artists would be exploding on Pandora. But we all know there are most likely hundreds of thousands of artists out there… we’d all have to stream just one of them at least 10 times per day for years to make them the same money they’d make from selling one single on itunes. Insane that anyone thinks its a good idea. You’d need 30-40 million subscribers to start making anyone any real money, and that just isn’t going to happen. The day Pandora starts offering a paid level with real perks is the day the business can start to add something to the industry. And sorry artists, anyone who really thinks the “exposure” you have from Pandora is worth making zero dollars on is just lying to themselves to feel better. Artists cannot survive on gigs and merch alone.

        • antitrust lawyer...

          Obviously neither of you are anti-trust lawyers, or lawyers of any kind. In layman’s terms, Apple’s agreements with app makers is that they’re subject to occasional review for things such as abuse, TOS violations and running afoul of any FTC or consumer abuses, but at this stage, Apple could not simply revoke a Pandora app or apps by anyone competing with iTunes…it would open up a lawsuit they would not win.

          Apple doesn’t care about Spotify, Rdio, Pandora, Tunein, they are happy to have them and even promote them in advertisments. Because if you ask anyone who has worked at Apple, iTunes and the divisions within it, a a freckle on Apple’s revenues. Dominance of radio and retail are just sources of pride and competitiveness, but not anything that affects the bottom line.

          • Big Swifty

            I am not an antitrust atty either. However, my experience with TOS agreements makes me think somewhere deep in the Apple TOS there is a clause that says they can remove an app for whatever reason they want.

            Pandora might bring an antitrust claim if Apple pulled the Pandora app however couldn’t Apple attorney’s simply say that pandora can keep their app on android phones which last I checked make up a significant portion of the market share?

          • Paul Resnikoff

            Perhaps it funs afoul of antitrust statutes, perhaps, but that would have to be argued. And once the argument is finished, years later, Pandora’s out of oxygen.

            Sadly, that’s the legal and regulatory system I now know; it’s sad but true.

        • Bandit

          I agree with your post until the end:

          “Artists cannot survive on gigs and merch alone”

          I disagree. Artists can survive on gigs and merch if their act is something worth seeing and hearing live more than once or twice.

          Unfortunarely many artists don’t realize that they are writing and performing crappy music. They have to discover this the hard way when no one wants to buy tickets to their show next time they are in town.

          It is extremely hard work (much harder than in the days when record labels were more willing to front you the money for promotion) but it can be done.

          • steveh

            If music is mostly crappy and worthless why is so much of it downloaded for free?

            If it was all such rubbish why would people go to the effort of finding the torrents?

          • Bandit

            You make it sound like some Herculean task to find and download content. It has been pointed out that here and other sites/blogs that Google makes it quite simple to find illegal content and/or Free apps that will do the work for you if you are lazy.

            Just because thousands of people download the latest Miley Cyrus song illegally does not make it good. It just means that it’s easy to do.

            The point I was trying to make is that if you put on a good show people will pay to see it. It’s not easy but a musician can make a living playing live

          • Evil Eye Gypsy

            You make a good point. The music industry has really done a 180. It used to be that bands lost money on tour, and toured only to promote their latest album. Now, most bands make only a modest profit on their actual songs, but make their bread and butter on live shows and merch.

  4. truther

    forget time spent, how much money have they spent on lobbyists which could instead go toward innovative ways to recreate the business model or pay for exclusive content? Is there any way to see how much they have spent on lobbying congress and is there a money trail leading toward the executives donations to political endeavors?

  5. Visitor

    Pandora will be fine. Now Spotify… who knows. Their radio is garbage and sexist as hell. That is the same result I have received from every service powered by the echo nest.

  6. Bingo Bongo

    I really can’t understand why there’s so much hate on this [cough] “news site” when it comes to Pandora. I get the lemming comments and ignorant rhetoric from the Johnny Come Interwebbers…..but why such a negative adgenda/slant from the “news” source?

    Anyone that’s been around the digital music business long enough to garner genuine respect should and does know how everyone gets paid.

    Fact: The artists will see less in their pocket per song with Apple’s privately negoiated deal than with Pandora’s compulsory compensation. It’s along and crooked pipe and DMN owes it to their readers to offer facts….not opinion.

  7. Adrian B

    Like anything new and “cool” there is always an explosive growth period at the beginning but then eventually things settle down and taper off. There is plenty of room for both Pandora and iRadio, and furthermore Pandora has some really terrific analytic data technology they could offer artists if they could ever get past those same artists challenging them (and all other internet radio stations) over royalties. Pandora is also already a standard ap in many car brands that have net connectivity. If you play the markets I see Pandora as a good “buy” with this dip.

  8. Casey

    This is probably going to hurt smaller services like Slacker, AccuRadio, and Last.fm more than it will Pandora.