Swedish music streaming service company Spotify announced on
Tuesday that it will begin offering free Internet radio.
Spotify's new feature for mobile devices will compete directly
with Pandora (NASDAQ:
Spotify users in the U.S. can stream Internet radio for free
on their iOS devices, including Apple's (NASDAQ:
) iPhone or iPad. The update is currently available for download
on Apple's App Store.
iPhone or iPad users can download the Spotify app and create
unlimited streaming radio stations from artists, albums,
individual songs, or playlists. Users can save tracks by simply
"liking" the song, allowing them to find it later. Pandora also
offers a song liking feature, but users cannot see which tracks
Spotify's users can now search through their friends'
playlists. Like Pandora, the free version will have commercials
and a limited amount of song-skips, and, also like Pandora,
Spotify offers a premium version. By paying $9.99 per month,
users get commercial free music and unlimited track skips.
Shares of Pandora saw increased weakness early during
Tuesday's trading session, as investors may have believed that
this will directly hurt the company's bottom line.
Benzinga spoke with a couple analysts covering Pandora to see
what they thought about Spotify's new service.
The general consensus seemed to be that Spotify's new service
is not too much of a worry for people holding Pandora stock.
"Pandora has visible costs, a competitive advantage, and a
much better pay structure with its government radio licensing
rates," one Pandora analyst stated. "It costs Pandora about $20
per streaming music hour, and has just attained break-even."
The analyst also continued to say that, like many
Internet-related companies, first movers attain about 80% market
share. Google (NASDAQ:
) has 80 percent-plus market share in search. According to the
analyst, Pandora will hit the 80 percent mark in the "next two
and a half quarters."
Shares of Pandora traded down as much as 7 percent on Tuesday.
Yet, later in the session, investors bid Pandora's stock back up.
Going into the close, shares were nearly unchanged.
Spotify has about 10 million registered users with about 3
million paying for the desktop premium service, while Pandora has
about 150 million registered users.
Shares of Pandora are trading about 13% higher
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.