What happened to Pandora?

Spotify is getting ready to go public. Apple Music is owned by the richest tech company in the world.So where ...

Posted: Mar 29, 2018 3:49 PM
Updated: Mar 29, 2018 3:49 PM

Spotify is getting ready to go public. Apple Music is owned by the richest tech company in the world.

So where does that leave Pandora?

Once a trailblazer in free digital radio, Pandora was late to offer an ad-free subscription service, and now it lags far behind its competitors. Management shakeups, a sinking stock price, financial losses and customer defections have checkered its recent past.

Now the company says it has a plan to turn things around by becoming a power player in the digital audio and advertising industries.

It is spending $145 million an audio tech firm called Digital AdsWizz, which builds audio ads for streaming services like Pandora, Spotify and iHeartRadio. It's a sign that Pandora wants to double down on the kind of advertising model that helped make it popular.

Related: iHeartRadio owner files for bankruptcy

Scott Walker, Pandora's senior vice president of ad strategy, said the purchase points toward a few goals.

AdsWizz serves not just Pandora but some of its competitors, too. By owning AdsWizz, Pandora can expand its business interests and gain a source of revenue.

That doesn't mean the company is killing off its signature brand. Walker said owning a digital ad firm helps Pandora bolster its own technology, and the company is still solidly behind its own service.

A huge chunk of its 75 million listeners still use the free, ad-supported platform that Pandora has marketed for years. Its much-touted algorithm promises that you can pick a song, artist or genre, and Pandora will find music for you that aligns with your taste.

But the market has changed dramatically. Several radio competitors have stumbled, including iHeartRadio, whose parent company recently filed for bankruptcy. Others, like Grooveshark, have disappeared entirely.

Meanwhile, Spotify and Apple Music began offering monthly paid subscriptions that allowed users to pick specific songs and curate personalized playlists -- with none of the annoying ads.

They found an audience. Spotify, which is available in many countries, says 159 million people use its service every month. About 71 million pay for a subscription. The Swedish company still loses a lot of money - around $1.5 billion last year - but it also has growth to show ahead of its anticipated public listing next week.

Apple Music isn't as large. It told The Wall Street Journal in February that it has about 36 million paid subscribers. But has one big advantage over independent companies: It's just a small piece of Apple's enormous business.

Related: Inside the war between Spotify and Apple

Pandora, which operates only in the United States, lost more than 6 million listeners last year, according to company filings. And its paid subscription service, which is relatively new, only has about 5.5 million subscribers.

"They missed a mark," said Gene Munster, a tech analyst and managing partner at Loup Ventures. "When Pandora was just ramping, it was thought that radio was the future of how most people wanted to interact with music. And what Spotify did was add controls and sharing playlists, and they just missed that."

Walker, the Pandora executive, said he doesn't see it that way. He said the company "made the right decision for us at the time."

He touted Pandora's current model, which offers different levels of service. Sure, you can still listen to Pandora radio for free with ads. But if you watch a short video, you'll get a trial of its own on-demand, ad-free subscription service called Pandora Premium, a $10-per-month service comparable with what Spotify and Apple Music cost.

There's also Pandora Plus, a cheaper subscription for the traditional personalized Pandora radio channels, but without ads. It costs $5 per month.

"We're at the early stages of how that subscription model is going to evolve," Walker said. He said the goal isn't necessarily to convert every free listener into a paid subscriber, but to figure out what each listener wants.

Related: Spotify plans to go public on April 3

Michael Pachter, a media analyst with Wedbush Securities, said he wasn't yet sure what to make of the AdsWizz deal. He questioned what Pandora had to gain from buying AdsWizz outright, instead of just paying for its services.

But he added that Pandora does need to find ways to make money. Although revenue has grown recently, Pandora lost more than $500 million last year. Pachter said a big part of its expenses are high royalty rates to license music for its three-level system.

"I think they are just stuck with higher rates, so they are going to keep trying to do subscriptions while they can," he added. "In the meantime, at higher rates, they need to generate more ad revenue."

Others suggested that Pandora as it exists might fade away.

"There may still be a Pandora brand five years from now, but it's not going to be a relevant source of traffic," Munster said.

He added that the company could even sell itself to another business. Last year, radio and telecom giants like SiriusXM and Verizon were floated as potential buyers. SiriusXM ended up investing $480 million, giving it a 16% stake.

"I think that the company in the future is going to be more of a platform that enables radio streaming ads than it's going to be about the brand of Pandora," Munster added. "They become an arms supplier instead of someone who's actually in the fight."

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 490011

Reported Deaths: 6618
CountyCasesDeaths
Hennepin1016821593
Ramsey43388811
Dakota36714394
Anoka33545392
Washington22247262
Stearns18847202
St. Louis14915265
Scott13445107
Wright12635116
Olmsted1187890
Sherburne879474
Carver790941
Clay696288
Rice678691
Blue Earth604435
Kandiyohi582274
Crow Wing523682
Chisago502945
Otter Tail487171
Benton451890
Winona419749
Mower411931
Douglas395068
Goodhue390169
Nobles387347
Polk345363
McLeod341950
Beltrami339151
Morrison328147
Itasca315346
Becker315143
Lyon314045
Isanti310056
Steele304311
Carlton300649
Freeborn287124
Pine283616
Nicollet263341
Todd250330
Brown249137
Le Sueur238620
Mille Lacs230047
Cass221424
Waseca211217
Meeker208534
Martin190829
Wabasha18733
Roseau181017
Hubbard161041
Houston158214
Dodge15464
Renville152940
Redwood147127
Fillmore14029
Pennington139816
Chippewa137035
Cottonwood136120
Wadena131520
Faribault125017
Aitkin119233
Sibley118310
Watonwan11838
Rock116314
Kanabec109120
Pipestone101924
Yellow Medicine97817
Murray9548
Jackson94710
Swift87818
Pope8185
Marshall78715
Stevens7478
Lake74318
Clearwater72014
Lac qui Parle68816
Wilkin67711
Koochiching62111
Big Stone5173
Lincoln5122
Grant4928
Norman4808
Unassigned45368
Mahnomen4437
Kittson41121
Red Lake3615
Traverse3115
Lake of the Woods2231
Cook1190

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 337836

Reported Deaths: 5500
CountyCasesDeaths
Polk52116562
Linn19519317
Scott17180213
Black Hawk14973294
Woodbury13858214
Johnson1317875
Dubuque12452196
Dallas1023593
Pottawattamie9899146
Story965445
Warren515176
Clinton502884
Cerro Gordo501483
Webster495888
Sioux480469
Marshall465473
Des Moines428661
Muscatine426493
Buena Vista413337
Wapello4059110
Jasper388167
Plymouth369178
Lee354653
Marion341772
Jones285355
Henry279837
Bremer270655
Carroll266848
Crawford253435
Boone244830
Benton241554
Washington239247
Mahaska215846
Jackson210339
Dickinson204340
Tama203165
Kossuth198655
Delaware186340
Clay184525
Winneshiek183729
Fayette179535
Page178119
Buchanan178029
Wright174531
Hamilton173942
Cedar172923
Hardin170339
Harrison167870
Clayton160154
Butler159331
Mills148520
Floyd148141
Poweshiek148030
Cherokee146336
Lyon145741
Allamakee144948
Madison143318
Iowa140723
Hancock138030
Grundy132530
Winnebago130531
Calhoun129711
Cass129751
Jefferson128534
Appanoose123447
Louisa122644
Mitchell120740
Chickasaw119915
Union119331
Sac118818
Shelby117634
Emmet115440
Humboldt113925
Franklin109719
Guthrie109728
Palo Alto101721
Howard99722
Unassigned9790
Montgomery97036
Clarke95220
Keokuk92429
Monroe90028
Ida82132
Adair81630
Pocahontas80919
Davis76623
Monona76527
Greene73110
Lucas72321
Osceola68315
Worth6678
Taylor64112
Decatur5719
Fremont5619
Van Buren53818
Ringgold50720
Audubon4769
Wayne47521
Adams3194
Rochester/St. Mary'S
Clear
53° wxIcon
Hi: 60° Lo: 33°
Feels Like: 53°
Mason City
Clear
55° wxIcon
Hi: 61° Lo: 34°
Feels Like: 55°
Albert Lea
Partly Cloudy
52° wxIcon
Hi: 58° Lo: 36°
Feels Like: 52°
Austin
Partly Cloudy
46° wxIcon
Hi: 58° Lo: 32°
Feels Like: 44°
Charles City
Partly Cloudy
50° wxIcon
Hi: 62° Lo: 34°
Feels Like: 50°
Prepare for a warmer but breezier Tuesday
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

IOOF Home in Mason City welcoming back visitors

Image

Sara's Monday Evening Forecast

Image

Pandemic impact on mental health

Image

Post Vaccine Freedom

Image

Third Stimulus Payment Eligibility

Image

Warm Weather Is Good News For Outdoor Dining

Image

03-08-2021 for Bri

Image

Minneapolis Prepares For Unrest As Chauvin Trial Starts

Image

Sean's Weather 3/8

Image

Rochester NAACP President calls for accountability

Community Events