Pandora holding off iTunes Radio in early going


PandoraThe conventional wisdom is that the introduction of iTunes Radio is going to take a big bite out of incumbent internet radio leader Pandora – but if that is the case, Aaron Pressman of Daily Ticker says it’s not showing up in Pandora’s stock price.

According to Pressman, on 11/12 Pandora’s stock price made it up to $28.36, the highest it’s ever been. (At 2:40 PM eastern 11/14, it was trading at $29.11, and according to the Pandora investors page, that represented a slight drop from even greater heights.)

Here’s why Pressman believes this is happening – it all comes down to user engagement. This is important, because the business model depends on the sale of advertising, so the longer a user is tuned into the service, the greater the ad exposure and the greater the value of the user to the service.

Unfortunately for iTunes, it seems to be attracting a far more casual type of user. Pressman relies on stats from B. Riley & Company, which show the average Pandora user spending 38.5 minutes with the service. iTunes Radio manages to keep its uses for only 9.5 minutes daily.

The theory is that only if and when iTunes can close the engagement gap will it become a significant threat to Pandora.