Reports that Apple is seeking to launch an personalised online radio service has sent shares in online radio company Pandora sliding. Source: AFP
PANDORA Media shares plunged after reports said Apple is in talks to license music for a rival online radio service.
Shares of American service Pandora, the largest internet radio operator, slid 17.6 per cent to $US10.35 ($12.72) in early trade on Wall Street.
The Wall Street Journal and The New York Times reported that Apple was studying a launch of a streaming music service which could be pre-installed on its popular devices like the iPhone and iPad.
Analyst Nat Schindler at Bank of America Merrill Lynch said the move by Apple could shake up the sector.
"Apple is currently the largest music retailer in the world and the move is likely being made to unseat rapidly growing streaming competitors like Pandora and Spotify," he said in a note to clients, while adding that the move appears to be "going after Spotify and not Pandora."
Still, he said Pandora could be hurt if Apple promotes its own service on its devices.
"Pandora, currently has 72 per cent-plus market share of online radio and six per cent share of the total radio market, partially due to its near ubiquitous device reach on over 400 different devices," the analyst said.
"Apple's large device installed base makes it a more serious threat than other current or potential competitors. Pandora we believe gets 40-50 per cent of its total usage currently from iOS devices."
The Journal noted that Apple had previously weighed launching a Pandora competitor, but dropped the bid due to licensing costs.
Pandora reported last week that its revenue climbed in the recently-ended quarter but that it still lost money due in large part to royalties paid out for songs.
The Oakland, California-based firm, which creates personalised radio stations for users, reported a net loss of $US5.4 million on revenue that rose 51 per cent to $US101.3 million compared with the same period last year.
Pandora went public last year at $US16 a share, one of several Internet companies to make their debut on Wall Street in 2011.
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