Pandora Media Inc (P), Apple Inc. (AAPL), Google Inc (GOOG): Want to Invest in Online Music? Listen to These Stats

Shutting out the noise
With all the streaming services out there, and more coming down the line, it’s tough for investors to find the right service to invest in. Pandora Media Inc (NYSE:P) has over 200 million users, but only 2.5 million subscribers. The company put a 40-hour listening cap on free music back in February, and said it gained 700,000 subscribers in fiscal first quarter 2014, in part, because of the cap. According to NPD, Pandora is the top streaming music service, with iHeartRadio and Spotify taking the No. 2 and No. 3 spots. But rival Spotify has more paying subscribers, and investors need to see if Pandora can continue to get users to open their wallets to the service, or if they’re opting for Spotify’s offering.

Sirius XM Radio Inc (NASDAQ:SIRI) has enjoyed some good subscriber growth as of late — 19% over the past two years — but its future rests heavily on the automotive sector. There are many more options for pairing mobile devices to in-car infotainment systems than there once was and, as these options become more prolific, I can’t imagine users paying the high SiriusXM subscription fees over low or no-cost streaming options like Spotify or Pandora Media Inc (NYSE:P).

As for Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG)’s streaming services, I think Apple has the advantage right now, even though it’s showing up late to the game. Apple customers are heavy users of their devices, which could give Apple a leg up over Google and its Android users. The problem for Apple is the same problem most streaming companies face — tons of competition. Pandora Media Inc (NYSE:P) and Spotify already have lots of mindshare, simple subscribing options, and multiple ways to listen that aren’t tied to specific devices. Apple will likely keep a tight reign on iTunes Radio and the devices it streams from, which will only hurt the company’s potential to garner paying subscribers.

If I had to invest in online streaming now, I’d wait to see if Spotify goes public. It’s hard not to recognize Pandora’s popularity, but I fear that Spotify’s gaining traction, and may eventually overshadow Pandora’s great service.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, Google, and Pandora Media (NYSE:P). The Motley Fool owns shares of Amazon.com, Apple, and Google.

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