A survey of more than 800 iOS device owners by investment bank Canaccord Genuity found that about 2% of iOS device owners and 8% of iTunes Radio users use the service exclusively. iOS is the operating system that runs on Apple’s portable devices such as the iPhone and iPad.
Although iTunes Radio has managed to quickly attract listeners, few people have given up other services. Canaccord Genuity’s survey found that of 72% of consumers currently running iOS 7, the operating system in which iTunes Radio is included, about 40% has tried iTunes Radio. (iTunes Radio is also available to users of the iTunes desktop application.) Thirty-six percent of iOS device owners have either not tried iTunes Radio or have never heard of the service. Forty-four percent of iOS device owners listen to both iTunes Radio and Pandora.
The numbers are less impressive when you take into account the universe of iOS 7 users. About 29% of iOS users (72% x 40%) surveyed have tried iTunes Radio, 2.3% of iOS users (72% x 40% x 8%) have given up Pandora and 12.6% (72% x 40% x 44%) split their time between iTunes Radio and Pandora.
Pandora scored better than iTunes Radio in various metrics gauging user satisfaction. More people surveyed believe Pandora plays the songs they want to hear (72% to 63% of iTunes Radio users). While 78% of those surveyed gave Pandora either a “positive” or “very positive” rating, only 66% of iTunes Radio users did so.
iTunes Radio’s impact on its biggest competitor will be clearer next week after Pandora releases its listener statistics for October. Last month, Pandora had 1.36 billion listener hours and 72.7 million users. A decline in either figure could be interpreted as evidence that iTunes Radio has eaten into Pandora’s business. In over two and a half years, Pandora has had only one month-to-month decline in active users and six month-to-month declines in listener hours.
People should refrain from reading too much into iTunes Radio’s early numbers. There is a big difference between small, brief success and actually competing with Pandora. As noted last week, Pandora easily beats iTunes Radio in average hours per user. Using figures from Apple CEO Tim Cook and my own assumptions, I estimate iTunes Radio averaged, at most, 2.57 hours per listener in its first 30 days. (I say “at most” because I assume all 1 billion songs, the figure given by Cook, were played in their entirety. That probably didn’t happen and some songs were skipped before they were streamed to completion.)
The iTunes Radio story will really get interesting when the service launches in other countries next year. Bloomberg has reported Apple will roll out iTunes Radio to additional countries in early 2014. Pandora operates in two of the countries, Australia and New Zealand, where iTunes Radio is expected to launch next. But Pandora isn’t operating in two other territories mentioned by Bloomberg, the United Kingdom and Canada.
Even if iTunes Radio doesn’t have immediate success against Pandora in the United States, it will find ample opportunity for growth in other countries. Many countries have on-demand subscription services like Spotify and Deezer but lack a standalone Internet radio service like iTunes Radio. Just as Apple generates most of its revenue outside of the United States — only 40% of revenue came from the United States last quarter — iTunes Radio could do most of its business away from Apple’s home country.