Apple Inc. (AAPL)’s iTunes Radio Announcement Couldn’t Have Been Worse for Pandora Media Inc (P)

Google Inc (NASDAQ:GOOG) launched its own streaming music service last month, Google Music All Access. It isn’t free — users must pay a subscription to get access — and it functions more like Spotify than Pandora, so it’s far from a direct threat.

But if Google wanted to add free radio functionality, what’s stopping it? Frankly, Google might never bother — it really isn’t in the company’s interests. Unlike Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG) doesn’t rely on iTunes to keep its customers bound to its ecosystem.

But if Pandora Media Inc (NYSE:P) ever demonstrated that there’s money to made when it comes to Internet radio, there’s seemingly nothing to prevent Google from entering the space. Warren Buffett is known for favoring companies with wide-moat business models — Pandora certainly isn’t one.

Pandora as an investment

As it stands, Pandora isn’t a profitable company. Last quarter, Pandora posted an adjusted loss per share of $0.10 (unadjusted $0.16). Investors appear to betting on the future, hoping that the company will eventually be able to monetize its ever increasing base of listeners.

But Pandora doesn’t own its content — it just distributes it. Other than name recognition, it is more or less powerless in the face of an ever increasing number of competitors.

And chief among those competitors is Apple Inc. (NASDAQ:AAPL)’s iTunes Radio. With its deep iTunes integration, Apple’s Pandora knock-off has the potential to drive away many (if not most) of Pandora Media Inc (NYSE:P)’s Apple product-using listeners.

So I ask the reader: Imagine an unprofitable company. Its business has seemingly no barriers to entry. It’s reliant on other companies to distribute its product, and some of these companies are moving to compete with it directly. Does that sound like a solid investment?

Joe Kurtz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.

The article Apple’s iTunes Radio Announcement Couldn’t Have Been Worse for Pandora originally appeared on Fool.com.

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