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Pandora says Apple Music contributed to 1.3M listener decline in Q3

Pandora CEO Brian McAndrews on Friday said he expects listenership to rebound after seeing Apple Music contribute to a decline of 1.3 million active users for the third quarter of 2015, noting the launch of Apple's streaming service is having roughly the same impact as that of iTunes Radio in 2013.

In its quarterly earnings report, Pandora noted a year-over-year increase of 1.6 million active listeners, bringing total users up to 78.1 million for the quarter. That number, while massive, represents a 1.6 percent sequential decline that McAndrews blames in part on Apple Music.

"This was obviously a unique quarter in the streaming music business," McAndrews said, according to a transcript of today's earnings conference call. "The June 30, launch of Apple Music with its 3-month free trial, as well as significant category spending and trial offers across multiple players, brought increased focus to the broader on-demand category during this period."

In spite of competition from Spotify, statistics show Pandora listenership trending upward over the past few quarters, with spikes during the holidays. The September quarter represents an unseasonal decline for the streaming service. Anticipating the effect Apple Music would have on Pandora's numbers, McAndrews last quarter warned of potential negative growth. The impact was in line with expectations, he said, characterizing the decline as short-term.

"I am pleased to say that, given the scale of press and consumer attention on this launch, the impact on our active users and listening hours was muted and was, in fact, consistent with what we experienced during the launch of Apple's radio service in 2013," he said.

The statements stand in contrast to an early evaluation of Apple Music in July, when McAndrews said the service had no material impact on Pandora one month in. Days later, Apple reported 10 million users had signed up to try out the new streaming product.

Uptake has expectedly slowed for Apple Music as the initial hype from June wanes. Apple CEO Tim Cook on Monday said the service now sits at over 15 million users, but more importantly boasts 6.5 million paying subscribers. That is a huge number compared to Pandora's audience, which largely opts to stream ad-supported content instead of ponying up for premium tier access.

For the quarter, Pandora notched $311.6 million in revenue, a 30 percent increase year over year, but posted losses of about $85.9 million due in large part to a recent settlement payout to record companies over content licensing agreements.