Apple is showing off some dazzling M’s:
- 200M iOS 7 activations (iOS 7 includes iTunes Radio by default)
- 9M iPhones sold (combined iPhone 5s and 5c)
- 11M unique listeners on iTunes Radio
That last item is generating some noise in the media echo chamber, and some misunderstanding. Witness this CNET headline: “At this pace, iTunes Radio beats Pandora in a month.” As baseball enters the scramble of its final pennant races, it should be a reminder that in sports and business, it’s a long season. Predicting Pandora’s defeat after less than a week of Apple competition is like predicting an undefeated season for a pitcher who wins his first game in April.
Furthermore, there is an importance difference between unique users and active users. As anyone in the content business knows, attracting unique users is hard, but converting them to active users who return to the brand is even harder. Pandora has over 200M uniques, and over 70M actives. It is fair to presume that many of Apple's 11M uniques were engaged in experimental listening. The three-month build-up to iOS 7 and iTunes Radio, following Apple’s WWDC announcement in June, naturally created some degree of must-try anticipation. No data are available as to whether Pandora experienced a listening dip over the weekend. But whether it did or not, it is reasonable to assume that Pandora and Apple are sharing uniques. Some of them will probably become unglued from existing Pandora habits. But it’s also reasonable to assume that with Apple’s colossal iOS 7 footprint (e.g. those 200M activations, with more to come), some of the 11M uniques are first-timers dipping their toes into the currents of internet radio for the first time. Those might be users that Pandora will never acquire ... or never would even absent Apple's gravitational field.
Music streaming is not a one-winner business, any more than the mobile ecosystem industry consolidates around a single dominant player. However, carrying through that comparison, major-league internet listening will probably boil down to two, three, or four preeminent platforms, surrounded by a cloud of smaller indies. If that’s how it plays out, it will in retrospect be unsurprising that Apple, with its intense user trust and equity in the music and mobile businesses, took a giant first step.
It might be worth noting that on Monday, Pandora stock (ticker: P) skidded from its Friday close of $26.99 to yesterday’s final price of $24.26, a plunge of just over 10 percent. There can be no certain connection between Apple's strong start and the precipitous one-day decline of P stock, of course. But Wall Street is no less reverberative than the media business.