Pandora is still the undisputed ruler of the Internet audio space

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Pandora’s February decline in listener hours could be a temporary blip

In the previous article in this series, we discussed Pandora’s (P) audience metric report for February 2014. Although it reported year-over-year growth of 9% in listener hours, on a month-on-month basis, this metric saw a decline of about 4%. We believe this could be a temporary blip, and if we factor in the fewer days in February, the decline would be negligible.

Internet Radio space

Pandora still the undisputed king in the internet radio space

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According to the results of a survey on music streaming adoption in the U.S. by Statista, Pandora’s share in the Internet radio market is 31%. After Pandora, the distant second is iHeartRadio, with a share of 9%. Apple’s (AAPL) iTunes Radio has about an 8% market share, Spotify has a 6% share, and Google (GOOG) All Play Access has a 3% share. Even though Pandora’s listener hours declined on a month-on-month basis in February, the company should make a comeback in terms of user engagement.

This thought was shared by Pandora’s chairman, president, and CEO, Brian McAndrews, who said, “So last year we had a unique situation with our growth that we actually we were working to slowdown and so I think we—as we go into Q2 and Q3, we think we will see re-acceleration in growth from what we saw in February.”

Can Pandora maintain its leadership?

No doubt, the Internet radio space is becoming crowded. Apple entered this industry in September last year, and Samsung has also recently announced its entry into this space. The trend of smartphone makers entering into this space could be a threat to Pandora, as smartphone makers have muscle. Other smartphone makers, such as Microsoft (MSFT)—after its acquisition of Nokia (NOK)—could also enter this market, creating even more pressure on Pandora.

In the next parts of this series, we’ll talk about how competitors are faring in this market and whether they pose any threat to Pandora.

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