Pandora: Still confident of position as leader

Published Tue, Jun 9 2015 3:35 PM EDTUpdated Tue, Jun 9 2015 3:35 PM EDT

Nana Sidibe

As more companies enter the streaming music industry, consumers will try different options but what is hard is to play music right, said Pandora Chief Financial Officer Mike Herring on Tuesday.

"We understand consumers are curious and we expect as new services are offered, people will reach out and try different services," said Herring in an interview with CNBC's "Squawk Alley." "That's happened many times over the years."

"What's really differentiated us is the focus we've kept on just playing lean-back radio better than anybody else. Playing the right song at the right time."

Herring's comments come one day after Apple launched its music streaming service during the Worldwide Developers Conference in San Francisco.

Apple Music, which will be available starting June 30, will provide millions of tracks for $10 per month. Features of Apple's service include Siri taking songs requests and playlists made by the likes of Rolling Stone and Shazam.

Andrew Harrer | Bloomberg | Getty Images

Pandora's stock opened at $18.30 on Monday and was down about 7 percent to 17 on Tuesday afternoon.

Herring said that Apple's announcement showcased "the excitement around connected music and music streaming." His company remained confident that it would retain its advantage thanks to its value proposition and the ability to monetize the service.

"Rather than being a feature war, it's really about a competition for music listening, one that Pandora has been winning for a long time," said Herring.

"Subscription is an important part of our business but we're mostly an ad-supported business."

There is a big opportunity in being ad supported since most Americans—about 80 percent—are willing to sit through ads rather than paying to listen to music, Herring said.

"Having a free option, a high-quality music option brings people into music," said Herring.

In contrast, even if Apple has credit cards on file thanks to iTunes it would need to persuade customers to subscribe.

"There's no doubt that having credit cards on file is a great advantage for driving Apple's subscription business, but they don't just get to charge those credit cards," Herring said. "They need to actually convince consumers that there's a value proposition that they're interested in."

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