Pandora Media Inc (P): Growth Is a Double-Edged Sword

iTunes Match costs $24.99 per year, less expensive than Pandora Media Inc (NYSE:P)’s $36 per year ad-free subscription. I doubt Apple Inc. (NASDAQ:AAPL) will make much money directly from the service, but its tight integration with iOS 7 is a selling point for Apple devices. And the record labels which own the content are likely thrilled with the ability to buy songs directly from the app.

The bottom line
My opinion for quite some time has been that a business based on paying royalties for content which is then streamed doesn’t make much sense as a stand-alone company. If these streaming companies began to make a considerable profit, the owners of the content would likely demand more money, reducing profits back to piddling levels.

As part of a broader ecosystem like Apple Inc. (NASDAQ:AAPL)’s, an Internet-streaming service makes sense, but I don’t think a stand-alone company like Pandora Media Inc (NYSE:P) will ever consistently earn meaningful profits. I’m not sure what investors see in Pandora, but I see a failed company waiting to happen.

The article Pandora Is Getting Desperate originally appeared on Fool.com.

Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Apple and Pandora Media. The Motley Fool owns shares of Apple. 

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