With Pandora and fears of rivalry from Apple's streaming radio service, it was a case of sell the rumor and buy the news. Past reports of Apple's pending service sent Pandora shares tumbling on various occasions.
But today, when Apple announced its iTunes Radio — Pandora shares closed 2.5 percent higher and continued to move up after-hours.
ITunes Radio is more similar to Internet-radio service Pandora, than on-demand Spotify. Here's how it works: users can pick an artist they like, and then iTunes will program a "station" with similar artists. Users can program their own stations or pick from ones Apple has already created. The radio stations are free, supported by ads, and for iTunes Match subscribers, they are ad-free.