Streaming music provider Pandora has struck a deal with electronics manufacturer Pioneer that will connect the internet radio service to users’ cars. The companies announced the deal at the Consumer Electronics Show in Las Vegas. The deal could represent a considerable threat to Sirius (NSDQ: SIRI) XM’s satellite radio service, which is offered by some automakers as a factory-installed option for newer models and accounts for a significant portion of the company’s revenues.
No money has changed hands between Pandora and Pioneer, a rep for the electronics company told the WSJ. Instead Pioneer will sell a device that will detect users’ Pandora settings on their Apple (NSDQ: AAPL) iPhones. The internet radio service claims about 42 million users, which could mean substantial revenue for Pioneer, even if just a fraction pay the $1,200 to buy the Pandora connection system.
Pioneer will start marketing the device in March. Pandora founder Tim Westergren believes that the Pioneer partnership will help change internet radio’s image from being “a computer thing” to being an “an anytime, anywhere thing.”
That could spell trouble for Sirius XM. The satellite radio provider has deals with over two dozen car makers, including Ford, Chrysler, and Mercedes-Benz, as well as rental companies like Hertz. Unlike Pandora’s free service, Sirius XM users pay $12.95 per month. The introduction of internet radio into cars could also be a further worry for some terrestrial stations, which are already trying to contend with the challenge of music recommenders like Pandora and Last.fm.