Pandora Media Inc (P)’s Broadcasting Its Message

More interestingly, Pandora’s penetration in Rapid City is phenomenal. Of the cities 107,000 residents aged 12 and up, 42,000 are registered for Pandora Media Inc (NYSE:P). That means loads of local data are suddenly available to programmers at the station. With the leverage of a terrestrial radio station, Pandora could use KXMZ to convince artists (that prove popular via its data) to tour in Rapid City.

Touring is the biggest source of income for many smaller acts, and it can often be an unprofitable endeavor for those that choose the wrong cities. Pandora has plans to share its streaming data with artists, but most are confused about how the data are useful. Suggested tour stops seems like a logical service Pandora could provide (but most of us know musicians aren’t the most logical creatures). If Pandora can prove such a service successful in Rapid City, it will likely be successful in larger markets as well.

Whether Pandora decides to sell the service or simply give it away in return for lower royalty rates, the company will benefit as will the artists.

Ending discrimination

Pandora’s newest piece of property is a great purchase. It’s hard to see how ASCAP can claim its that much different from Clear Channel now, and its hand may be forced to offer Pandora the same terms as its biggest internet radio competitor. The effect will be minimal in the short-term, but Pandora Media Inc (NYSE:P) is setting itself up for long-term success as royalty rates are set to rise quickly, and internet streaming competition increases.

Pandora and ASCAP are currently battling it out in federal court. A decision in favor of Pandora, which I believe the KXMZ purchase makes likely, could be a major catalyst for Pandora’s stock.

The article Pandora’s Broadcasting Its Message originally appeared on Fool.com and is written by Adam Levy.

Adam Levy owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Adam is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.