Company / division: Pandora
Pandora has been testing a new ad model for some time and is now launching it broadly. The model offers users an opportunity to trade watching a video ad for extra skips and playbacks, both of which are normally limited under its ad-based option. That’s a familiar model from the mobile gaming market, where games often offer users additional lives or other in-game features in return for watching video ads, although anecdotal evidence from my own family suggests that those ads aren’t really being “watched” in any meaningful way – they basically insert a 30-second delay in game play during which the player does something else. Pandora says a high percentage – 42% – of its active user base has signed up for this program, which is called Video Plus, so that’s a good start, but the key metrics here aren’t the number of signups or even the number of times people agree to trade an ad view for in-app functionality, but brand recall and other more traditional ad metrics which would demonstrate that users are actually watching and taking in the content of video ads. There’s no mention of any of that in the Adweek article linked below, and whether this new model ultimately succeeds or fails will depend entirely on whether brands actually see a decent return on the investment.
Facebook and Google Dominate Top 10 US Apps List (Aug 24, 2017)
Pandora’s Premium Subscription Growth Slows in Q2 (Jul 31, 2017)
The main news item linked below just confirms the reports from over the weekend which I covered yesterday, which suggested Tim Westergren would be stepping down shortly. In the end, it seems he’s stepping down both as CEO and from the board immediately, rather than sticking around, so the CFO will take his place. One thing that wasn’t reported over the weekend is that two other execs – the President and CMO – are also leaving. And lastly, former Viacom, Sling Media and News Corp exec and current media commentator Jason Hirschhorn is joining the board. One quick note: though Recode makes it sound like Hirschhorn is replacing Westergren on the board, Pandora’s press release makes clear he’s filling another recently created opening on the board (which I take to be replacing Pete Gotcher, who stepped down in May). The fact that other execs are also leaving reinforces my sense from yesterday that all this is driven by a clash with soon to be part-owners SiriusXM, but it’s still not entirely clear whether they truly jumped or were pushed. Either way, I continue to be believe we’ll see some big changes. On that note, Australian site Ad News reported that Pandora would shortly shut down its operations in Australia and New Zealand, and Billboard later got confirmation from the company that that’s the case. That would be just the kind of strategic refocusing I’d expect to see over the next few weeks and months.
Pandora CEO Reportedly to Step Down (Jun 26, 2017)
Weekly Narrative Video – Streaming is Saving Music (May 19, 2017)
This week’s Narrative Video is on the Streaming is Saving Music narrative. This narrative was in the news several times this week, with Spotify’s 2016 financials leaking, news that SiriusXM is debating a bid for Pandora, and Rhapsody’s announcement that it’s making layoffs and replacing its CEO. The reality is that streaming music is doing wonders for the music labels, but the streaming services themselves continue to struggle. And it’s worth noting that it’s paid subscription streaming specifically that’s really giving the industry a boost. The video talks through these topics and other trends in the industry, reality-checking the prevailing narrative. Subscribers can see the video on the Streaming is Saving Music page. If you’re not yet a subscriber, you can sign up for a 30-day free trial here, and you’ll get access to this video, past videos, all the latest commentary on the site, and lots more besides.
SiriusXM Talking to Pandora about an Acquisition (May 18, 2017)
Pandora, which has long been one of the most popular online music services in the US but has also long struggled to turn a profit based on that popularity, is apparently in talks with SiriusXM about an acquisition. By contrast, as I wrote in a column for Variety a few months ago, the latter is one of the big success stories in the subscription content world, which I suspect mostly flies under the radar because it delivers through satellites rather than the Internet. What the two have in common, of course, is radio, though neither provides the traditional FM or AM variety. SXM already has a limited online version of its service, while Pandora has recently been branching out into on-demand music, but there’s probably quite a bit more that could be done by bringing the two sets of assets and their respective audiences together. The fact that Rhapsody today announced job cuts and the departure of its CEO is indicative of just how challenging being a second-tier player in the music streaming business can be. And in reality the second tier encompasses essentially everyone but Spotify and Apple, while even Spotify seems to be heading in the wrong direction financially.
Pandora Opens Streaming Subscription to All (Apr 18, 2017)
Pandora Premium: the original music streaming giant is ready for prime time – The Verge (Mar 13, 2017)
I went to download the Pandora app so I could try out this new Premium service, but it’s not available yet, so the headline is inaccurate on that point at least. It also looks like there’s no desktop or even web app, which feels baffling given how many people probably listen to Pandora on a computer at the office. However, the app itself looks interesting – as befits Pandora’s heritage, it’s big on recommendations, though its characterization of everything else out there as “30 million songs behind a search box” feels entirely inaccurate, given how much effort Spotify and Apple Music put into recommendations. Pandora won’t succeed on the concept alone, but because (and if) it’s better at it. It’s always had a unique approach to that challenge, dissecting the music itself with its Music Genome Project rather than simply taking an Amazon-like “people who like this also like that” tack. But that means people actually have to experience it (or know someone who has) to know if it’s truly better, which means convincing them to give it a try will be the biggest challenge. For the 80 million regular users of the existing Pandora service that’ll be easy, but I’m not as sure about the rest of the world.
via The Verge
The Key to Pandora’s Subscription Hopes: Country Music – WSJ (Feb 21, 2017)
This is a fascinating angle on Pandora’s shift to becoming an all-you-can-eat subscription music provider next month: the idea that it’s uniquely appealing to country music fans and hopes to convert many of them to $10-a-month paying subscribers. The article presents lots of interesting evidence on every point but one: that country music fans aren’t already subscribing to other services – a point it finally concedes in the penultimate paragraph. It certainly is true that other streaming services have focused on other genres, principally pop and hip-hop, and that country music fans have been a neglected bunch. But if Pandora is staking its push here on winning over this group, I suspect it’ll have a tough time making a business out it – subscription music is a scale business, and Pandora’s appeal will have to be broad to be successful.
Billboard does an annual Power 100 ranking of the most important/influential execs in the music industry. Coming at this from a tech angle, there are several notable companies on the list: Spotify’s Daniel Ek takes the top spot, several Apple folks are at #4, Amazon at #12, iHeartMedia at #19, YouTube at #30, Pandora at #34, Facebook is at #54, and various others are scattered through the second 50. Amazon’s ranking is surprisingly high, but is entirely due to Billboard’s perception of Echo and Alexa’s role in transforming music, as illustrated by Billboard’s interview with Jeff Bezos and Amazon Music head Steve Boom. I think the take here is a little overblown, but there’s no doubt Echo and Alexa are changing the experience of music for the small minority of people who use them. YouTube’s relatively low ranking is surprising given how important a channel the site is for the music industry, but of course its relationship with the labels and artists is complicated. This kind of ranking exercise is always somewhat arbitrary, but it’s interesting to get a music industry take on the tech companies and their relative importance here.
Pandora Reducing Workforce by 7% – Variety (Jan 12, 2017)
Pandora is one of the longest-standing music streaming services in the US, and yet it is perennially challenged to make a decent profit. Today, it announced it’s cutting 7% of its US workforce to refocus its business, though it hasn’t said which bits are being cut and which are now considered core. My guess is that this is a reflection of the imminent launch of its subscription all-you-can-eat service and perhaps a de-emphasis on its traditional radio-style business, but more clarity will likely emerge soon. This is just another indicator of just how tough it can be to make money in streaming music, despite the boon paid music subscriptions have been to the music labels in the last couple of years.