Survey and Interview: iTunes Radio little threat to Pandora

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Issue Date: 
Oct 29 2013 - 12:25pm

From Issue:

Investment firm Canaccord Genuity surveyed Pandora users who have tried iTunes Radio, to get a picture of its existential threat to Pandora. The survey’s headline indicates a limited downside to Pandora: “92% of iTunes Radio Listeners Still Use Pandora.” RAIN spoke with Michael Graham, author of the research note, to flesh out the survey’s conclusions.

It is important to note that the survey and its report are part of a “Buy” recommendation for Pandora stock, to the company’s investment clients. We asked Graham about the integrity of the research.

“We commissioned this survey from an outside party,” Graham told RAIN. “We had no influence over the who the respondents were. We presented the data as we got it. Obviously there are different ways to interpret it. But the data that we’re showing is raw.”

While the context gives this survey an agenda (Graham: “We’re bullish on Pandora”), it presents an interesting antidote to the fuzzy media math surrounding the iTunes Radio-vs.-Pandora comparison of audience metrics reported by the two companies. (See RAIN coverage here.) Apple recently announced 20-million unique users have listened to iTunes Radio, while Pandora cited 72.7-million active listeners were engaged with Pandora in September.

The research also peers below the pure number of listeners in each service, to discern the reaction and intent of those listeners when evaluating the two competing music platforms. Following are excerpts of our conversation with Michael Graham. 

RAIN: What was the purpose of the project, and the sample size?

MG: We surveyed 860 users, all “iDevice” [Apple] users. We asked them a few qualifying questions: First, are you an active Pandora listener? Second, are you using iOS 7? Third, have you tried iTunes Radio? We then asked them a few questions to compare and contrast the two services, and what their intentions were for future listening.

The purpose was to understand better how competitive the landscape is becoming. We’re bullish on Pandora stock. We’ve tried iTunes Radio extensively, and found it to have good and bad points. We wanted to see what consumers at large think of it. In the short term, we wanted to gauge what the impact would be of Pandora’s October audience metrics.

RAIN: What are the key takeaways?

MG: Number one, 92 percent of those who tried iTunes Radio indicated that they have gone back to using Pandora at least a little bit. Sixty-six percent indicated that they resumed using Pandora as much, or more, than before using iTunes Radio. About 40 percent said they are using Pandora more than iTunes Radio. This is significant. It means that a very small portion will listen to iTunes Radio and never listen to Pandora again. The others will probably fire up their Pandora account in October. So, short-term, we don’t think the October listener metrics [for Pandora] are going to suffer much.

Longer term, I think the implication is that there will be a lot of people using both services. If we roll forward the math behind all this, the eight percent portion of the addressable market that iTunes Radio can go after (not Android, Windows PC), we come to about one percent of the Pandora listener base that is at heavy-duty risk of leaving, and going to iTunes Radio. That’s a much smaller number than most people are scared of.

RAIN: Do the data indicate whether iTunes Radio is expanding the market for streaming listening, or merely is dividing the existing pie differently?

MG: We didn’t explicitly ask that. As a matter of fact -- our survey only questioned Pandora listeners, so we only determined whether iTunes Radio was dividing the market or not. My hunch is that it is expanding the market, and a big chunk of those 20-million [Apple-reported unique listeners] is incremental.

Comments

good

The global market has been controlled by Pandora service over the years and it will be hard for the new iTunes radio to overtake the same. The survey is revealing the statistics quite clearly. Anyway good to know about the services in detail. Instant Tech Support Browser Issues

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this is something I think about constantly and I suspect social media is going to play an important

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