One exception is the Huffington Post story Pandora’s Big Challenges: Fees and Foes by Bianca Bosker. She acknowledges the service’s considerable lead, but warns that:
While confronting its considerable content costs, Pandora must also face a growing number of competitors for the advertising dollars on which it relies.
Pandora has long touted its Music Genome Project engine as unparalleled in its ability to deliver playlists personalized to each users' taste –“the most sophisticated taxonomy of musical information ever collected,”the company brags.
But experts counter that besides good marketing and buzzwords, there is little to distinguish Pandora's recommendation engine from other services. (Quoting Steve Gordon, author of The Future of the Music Business) “There's been a lot of publicity given to Pandora’s ‘secret formula,’ but I don't think that's the key to its success.”
Bosker quotes Aram Sinnreich, an assistant professor at Rutgers University's School of Communication and Information, who sees growing challenges for Pandora:
The differences between Pandora, a social media site on which people post links, and a music blog will continue to erode, and Pandora will continue to have to find ways to differentiate itself from the myriad other avenues through which online consumers will get music. The domain which Pandora currently rules is going to become much larger and much more competitive.
As if on cue, this week it was announced that Verizon was granted patent 20110003544, entitled A System for and Method of Receiving Internet Radio Broadcast via Satellite Radio.
You might ask why a mobile phone company would be interested in satellite radio. As explained on the investment website Seeking Alpha:
Cell carriers are faced with a crisis of sorts, which stems from bandwidth hogging applications such as internet radio. Auto manufacturers are now including these types of offerings in their vehicles. The strain on bandwidth can only increase.
If a satellite service, however, could deliver audio entertainment options to a cell phone through the use of its own satellites, the cell carriers could free up more of their existing bandwidth.
Apple's iPhone patent gave us a first glimpse of this idea. This new Verizon (VZ) patent, conversely, proves that the speculation of what Sirius XM's SATRAD 2.0 offers is worthy of excitement.
It turns out that while everyone has been assuming that mobile bandwidth will expand as demand grows, the mobile companies themselves are working on alternatives.
While it might solve Verizon and AT&T bandwidth problems, it also creates new opportunities for satellite itself. The system would allow Sirius to feed customized content such as Pandora-like playlists to a Sirius receiver.
These developments illustrate the challenge of predicting the future. Innovation rarely moves in a straight line. Satellite radio, whose future looked dim, may one day be an app on Droid and Apple mobile phones.
We’re also probably not too far away from the day when HD radio channels are repurposed to deliver customized content.
We have repeatedly suggested that Internet radio is in its infancy and no one knows what it will ultimately look like. Rather than a single broadband delivery system from companies like Comcast and AT&T, it may turn out that broadcasters (maybe even satellite broadcasters) play a central role.
Regardless of how it is delivered, content will always be key. And broadcast radio has a tremendous advantage.