The risk to Pandora from the combined Apple-Beats entity is limited because the fundamental structures of the services are different, says Peck.
"Pandora garners 81% of revenue from free ad-supported non-interactive radio," he writes, meaning that its primary business does not come from the type of on-demand, any song at any time options presented by the Beats service.
According to Peck, Pandora is already competing successfully with Apple in its core business, as the latter's iTunes Radio and Match are directly comparable. What's worth monitoring is whether Apple can mesh Beats curation with its existing services, since Pandora "is widely viewed as having a better music recommendation engine."
Another, ancillary threat in Peck's view is a "halo effect" where the marketing push following the Apple-Beats marriage lifts all boats in the iTunes music area.
While Peck isn't worried about Pandora, he does think Spotify, a more direct competitor with the Beats service, is at risk. The $3 billion takeover isn't far off Spotify's $4 billion valuation, he writes, and Apple's almost limitless financial wherewithal means there is plenty of cash available to fund growth at Beats.
"[W]ith Apple's brand, marketing muscle, hardware (bundling), carrier relationships (subsidies), and global reach, we suspect Apple will challenge Spotify's leadership in interactive and we suspect with lower content costs" thanks to Beats' music industry relationships fostered by Dre and Iovine, Peck writes.
Shares of Pandora had a mixed start Thursday, opening higher before slipping back to a 0.4% loss at $25.20. Apple continued its recent rally with a 1% gain to $629.91 after announcing the Beats deal. Spotify is privately held and reportedly mulling an initial public offering that could come later this year.