In the following video, Jeremy Phillips and Austin Smith discuss the future of Pandora.

Jeremy calls the company a "dumb pipe" that doesn't own its content, all while it goes up against Apple and Amazon.com, which have billions of dollars to play with as they seek to build on their market shares.

Austin notes that those two companies are willing to sustain losses in this business -- Apple for the sake of further developing its products' ecosystems -- and says there may be no winner in this market at all, as there are no economies of scale and costs keep rising. Even worse for Pandora is that it has no intellectual property, leaving its business ripe for disruption.


For more details, check out the video.

Pandora has won millions of devotees among music fans but few supporters on Wall Street. The online jukebox seems to be redefining the way we consume music, a transformation that's only likely to grow. But high royalty rates and competition from all corners threatens to silence the company. Can Pandora translate success with its listeners into a prosperous business model that will deliver for investors? Learn about the key opportunities and potential pitfalls facing the upstart radio streamer in The Motley Fool's new premium research report. All you have to do is click here now to subscribe to this invaluable investor's resource.

The article Why Pandora Will Never Be a Great Investment originally appeared on Fool.com.

Austin Smith owns shares of Apple and Google. Jeremy Phillips owns shares of Apple, Google, Walt Disney, and Amazon.com. The Motley Fool recommends and owns shares of Amazon.com, Apple, Google, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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