This Is Music to the Ears of Apple Inc. (AAPL) Shareholders

When asked how Apple’s new feature will impact their business, Pandora Media Inc (NYSE:P) responded with the following statement:

“Apple’s new feature is an evolution of their iTunes offering to bring it on par with other streaming music services that have added radio into their feature sets. We have spent the last 13 years singularly focused on redefining radio and benefit from unrivaled intellectual property, deep experience in delivering personalized play lists, and ubiquitous product availability across every platform. We make it effortless for our more than 200 million registered users to connect with the music they love anytime, anywhere,”

To me, it sounds very ironic that Pandora is downplaying Apple’s new entrance to the radio space. In Pandora’s case, advertising makes up about 87% of sales. The rest comes through premium Pandora One subscriptions. Pandora One is Pandora with no ads and better sound quality, and it costs $4 per month. But it has plenty of competition in Spotify, Grooveshark, Sirius XM Radio Inc (NASDAQ:SIRI), and even iTunes. And, most importantly, you can use its products for free without ever having to cough up a penny. I love music, and I want to love Pandora. I could see some users becoming addicted to it, the way you might to a favorite radio station or TV show or computer game. But if it’s not making money now – with over 200 million registered users – will it ever?

Pandora Media Inc (NYSE:P) generated $138 million in revenue last year, but like many of the other social media companies it failed to turn a profit. And that’s because it doesn’t have a profitable business model like Apple and Google.

The Fool listens ahead

I believe the market is dead wrong about downplaying Apple’s move to the radio space, and endorsing Pandora instead. If history is any guide, Apple will flourish while Pandora will be completely wiped out. This should be music to the ears of Apple’s shareholders.

Shmulik Karpf has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Shmulik is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article This Is Music to the Ears of Apple Shareholders originally appeared on Fool.com is written by Shmulik Karpf.

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