Over 11 Million People Have Already Used iTunes Radio

It is too early to say if iTunes Radio will become a serious competitor to Pandora. To establish itself as a dominant presence in Internet radio, Apple will have to compete against companies that specialize in radio — Clear Channel, SiriusXM and Slacker, in addition to Pandora. But the release of this surprising figure suggests the pecking order of the U.S. Internet radio market might be less settled than previously thought.

The news knocked over $650 million off Pandora’s market capitalization Monday morning. Shares of Pandora, which hit an all-time high of $27.50 the day after iTunes Radio launched, were down 11% to $24.03 at midday Monday. Even so, Pandora has been flying high lately. Shares of the Oakland-based company are up 162% this year.

The true measure of iTunes Radio will come from returning users, not early trial users. If iTunes Radio is able to keep those 11 million users over the coming months, it could make a dent in Pandora, which ended August with 72.1 million monthly active listeners.

Apple is also likely to find increasingly strong competition from Clear Channel’s iHeartRadio. Clear Channel has negotiated deals with record labels — such as the one announced last week with Warner Music Group — that allow it to put greater emphasis on webcasting.

But there’s a big drop-off after Pandora. According to Triton Digital’s latest tracking of U.S. webcasters, Pandora led the market with 888.1 million session starts in August. Second-place Clear Channel had 147.3 session starts and Slacker was third 38.6 million session starts.