Pandora Keeps Growing, but Apple\'s Plans Add to the Uncertainty

Music September 20, 2012, 12:46 pm

By BEN SISARIO

Apple may soon be heading into the crowded field of Internet radio, a development considered momentous enough in the world of digital music that the day after Apple's plans emerged earlier this month, Pandora Media's stock plunged 17 percent and has still not recovered.

But it may not be so easy for Apple, giant that it is, to displace Pandora in the hearts of music fans. Pandora has amassed 55 million monthly users, and according to a new study by the NPD Group, which tracks consumer behavior, half of all Internet users in the United States were aware of Pandora, and half of those people used it. By comparison, 25 percent of Internet users were aware of iHeartRadio, the radio app of Clear Channel Communications, and 19 percent for Spotify.

“Pandora deserves credit for becoming the premier application beginning with the iPhone in 2008, and expanding to the new generation of devices,” Russ Crupnick, NPD's senior vice president of industry analysis, said in a statement announcing the report this week.

When it comes to music sales, however, Apple is dominant by a wide margin. According to NPD's research, Apple's iTunes store had a 64 percent share of all digital music sold in the United States for the second quarter, with Amazon a distant second at 16 percent. Apple sells so much music, in fact, that it has overshadowed all other retailers, digital or physical. According to NPD, Apple has a 29 percent share of all retail music.

With Apple's reach, and its ability to pre-install an app to every mobile device it ships, any Internet radio service it offers could quickly build a huge following.

The service was not mentioned during the announcement of the iPhone 5 last week, and Apple is said to be just beginning its licensing negotiations with music companies, a process that can take months. And with every month that Apple's service is delayed, Pandora's growing audience gets a little bigger. In the last year, its monthly user base has increased  nearly 50 percent, and so far it is showing no signs of slowing down.