Morgan Stanley Still Holds Pandora, Says Apple Music Price Point 'Not Disruptive'

In a report published Tuesday, Morgan Stanley analyst Benjamin Swinburne maintained an Equal-Weight rating on

, saying that their recent survey work and historical trends indicate the majority of audio consumption will continue to be on "free, primarily lean-back services." According to Morgan Stanley's 1st Annual MS Music and Radio Survey conducted in January 2015, only about 30 percent of respondents indicated interest in subscription music services, while a third of the interested respondents demonstrated interest at a $10 price point or above. Moreover, customer satisfaction for free services appeared higher. "These results, combined with a historical view that ~80% of music listening is lean-back (traditionally on free radio) vs. ~20% lean-forward (predominantly recorded music), underpin our view that free music will drive the lion's share of audio consumption over the long-term," analyst Benjamin Swinburne said.

has not announced any major new or expanded free services and appears to have ended iTunes Radio. Swinburne commented that this leaves "space in the ecosystem for Pandora to serve the free/ad-supported market." "Additionally, Apple Music's $10 price point was not disruptive, though the $15 family plan (up to 6 users) does appear somewhat more compelling," Swinburne said, while adding that Apple Music's launch can be expected to exert pressure on Pandora's volume growth in 3Q, although "historically the market has overestimated the impact of new offerings on P's growth rate."