Content Gold Lures the Cash From Apple Inc. (AAPL)

The loser

The big loser in this deal is likely Pandora Media Inc (NYSE:P). When the Pandora service was introduced, the online radio concept was revolutionary. It isn’t anymore. The company has a first mover advantage and name recognition, but Apple Inc. (NASDAQ:AAPL) has an installed base of devices with which Pandora can’t compete. In fact, Pandora’s users have to seek its service out. And, iTunes Radio will be closely tied to iTunes, further enhancing Apple’s model.

Although Pandora Media Inc (NYSE:P)’s top line has been growing steadily, its bottom line has been going in the opposite direction. With a money losing business, any defection from Pandora to Apple Inc. (NASDAQ:AAPL) will be a big issue. Investors should probably avoid Pandora shares until the impact of Apple’s iTunes Radio is clear.

The big winner

Sony Corporation (ADR) (NYSE:SNE) is probably the big winner in the iTunes Radio launch. Not only does the deal show just how valuable the company’s content is, but it should give the company that much more time to turn its consumer electronics business around. Apple Inc. (NASDAQ:AAPL), of course, will benefit, since iTunes Radio moves the company more toward annuity-like services revenue streams, which will help reduce its reliance on device sales. Pandora Media Inc (NYSE:P)’s money losing service, meanwhile, just found a new problem to deal with.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL).

The article Content Gold Lures the Cash From Apple originally appeared on Fool.com.

Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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