Pandora Premium

On-demand music. Pandora's answer to Spotify.

#4 Product of the DayMarch 13, 2017



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Ryan Hoover@rrhoover · Founder, Product Hunt
From Fast Company's @johnpaul: Pandora Just Released Its Spotify Killer, And It’s Surprisingly Impressive I don't know enough about the music industry to know what it takes to pull this off but Pandora Premium feels like it's a few years late. Although Pandora has 78M monthly listeners, Spotify has 50M paying subscribers. My assumption is that most paying users have already settled on a music-streaming default, making it increasingly difficult for Pandora to get them to switch. If I was Pandora, I would leverage brand partnerships and built-in integrations (e.g. in the car) as much as possible to convert new subscribers. Curious to hear other peoples' POV. cc @adammarx13
Ryan Gilbert
@ryangilbert ·
@rrhoover Totally agree with your thought on paying users having settled on their music-streaming service of choice. I used to be a huge fan of Pandora as I liked being able to select a few artists/songs and have it build a relatable station that was constantly feeding me new music. However, when that novelty sort of wore off I became a paying user of Spotify and never looked back. It'll be interesting to see if this is enough to convert paying Spotify, Apple, etc. users over to Pandora.
Joshua@joshua_pielago · Product @ SEOReseller
@rrhoover @johnpaul @adammarx13 Unless they can somehow include a way to import playlists from other products (Spotify, 8Tracks). Music I think is too personal for people to keep on switching. And Spotify is cheap, and partnered with telcos for easy billing (at least here, in the Philippines) It would be interesting to see what else they're going to do after this to go after paying Spotify users.
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@rrhoover @johnpaul Writing a larger piece on this (and other streaming services) right now, but here's my takeaway this moment: it won't change the landscape much at all. Here's why: 1) Pandora's on-demand offering is coming fairly late in the game; even Soundcloud beat them there (as a contingency for their label licensing deals over the last 18 months). This is especially important, considering the fact that Pandora is uniquely different than Soundcloud because of its material offering: whereas Soundcloud lived in the independent world for a while (before trying (and arguably failing) to move into major label content), Pandora has arguably always subsisted on major label content, merely distributed in a different fashion. You listen to the same Katy Perry or AC/DC songs as you would on other major label-focus services, but your engagement is through a radio dynamic. That's what made Pandora unique among the big services. Radio creates serendipity, and as much as people love curation, the drive towards "the ultimate recommended playlist" is actually what has made cracking discovery so hard for these services; they've moved away from serendipity, something so important to the delight-factor in music. 2) Unlike the other music services, Pandora's royalty rates are not negotiated per deal; they are set by an independent government organization called the Copyright Royalty Board. The pro here: they're not subject to the same types of royalty-label whims as Spotify or Soundcloud. The con here: because they are assessed based on a terrestrial radio format, they similarly have no wiggle room to negotiate better terms; they're stuck where they are. This is doubly confusing now that they have an on-demand feature. Will that part of the business be subject to the same type of terrestrial radio royalty rules, or will it be something different? The waters get muddier and harder to maneuver. 3) Pandora REALLY needs a win, which is made all the more stressful by their existence as a public company. Frankly, their numbers since they IPO'd in 2011 have been ok, but not bombastic, and since a spike in 2014, have posted pretty consistent losses. And that's on top of running around spending over half a billion dollars in 2015 (~$75M for the remnants of Rdio, and ~$450M for TickeyFly), which they now need to put to work. I broke down the numbers here when writing on Spotify's potential IPO last summer: 4) Add to all that the reality staring every major music service with major label licensing fees in the face: the rising revenue opportunities are now not coming from major label artists, but unsigned/independent ones. So while the major music services will of course continue to offer major label material, that demographic isn't even the highest earning one anymore. In effect, while music services scramble to continuously renegotiate major label terms for their life-blood (the major label material), the music landscape as a whole will move (is moving) towards a more independently focused paradigm, where, ironically, those major licensing expenditures might not be necessary. So, something to consider there. And, as Ryan and many others are pointing out, none of this even takes into account the people-factor, wherein people will likely settle on one service for their mainstream needs. Thus, for the major label content, users will likely choose between Apple, Spotify, or Pandora (maybe Soundcloud) for their premium dose of mainstream, major label material without subscribing to multiple. The way forward, then, is not in proving more of the same, but more of the different, i.e. new, independent music which is ever-expanding and flexible to distribute.
Syed Khan@syed_khan · TheGO: Video Review & Discovery App
@rrhoover I agree with you that built-in integrations work great but i would go a step further and partner with other ride sharing companies likes Lyft/uber, partner with smart tvs and wearable to create more user exposure. Pandora has lost a lot of market share and they have a lot of catching up to do when it comes to converting the spotify users back to pandora. Pandora= Myspace generation Spotify= Snapchat generation for now i will enjoy my free version of spotify because i have already memorized the ads *shrugs*
Corey Crossfield@coreycrossfield · Head of Digital, Revelation Management
@adammarx13 @rrhoover @johnpaul Spotify will win the streaming war - no questions, no prisoners, hands down. Apple Music has the money but with all of the major labels owning a piece of Spotify that is the sure bet here. Not to mention their users surpass every other streaming platform currently in rotation. Pandora is largely limited not only by the listening experience but also the geographic regions it operates in. YouTube still surpasses any of these in terms of people actually listening to music on a platform. And they pay the worst! Classifying any listening services by the type of user they have is irrelevant. It has more to do with the style rather than the service and their distribution model. Pandora skews older because it's passive and has more of the radio model of listening. On Spotify a user actively curates themselves with songs and involves more of a discover experience through playlists they are are subscribed to or what their friends are listening to and sharing. Spotify does make music a more social experience which is how we can probably attribute a younger audience to Spotify and not Pandora. Pandora is more of a radio experience which could be why they skew older since listening services and iTunes came around later than when the average Pandora listener came to consume music. When the labels get revenue from Spotify's eventual IPO, they will not only be payed out on the mechanical and publishing side of things but for their IP in these platforms. That is where the real problem lies in streaming. Across all of these services there's no standard way of paying out a mechanical royalty for artists and differs based on the type of license each platform has agreed to with the content owners. While a mechanical royalty is technically for a sale of music, with their being a set mechanical royalty for an iTunes sale (9.13 cents) there should be a streaming mechanical royalty paid out and agreed upon by the industry. However that is determined (1000 streams = 1 song purchase) that is what will change the music industry and make it more reliable in terms of revenue. We're basically training an entire new generation of music listeners from the ownership model to an access model which is indicative of where we are heading with streaming finally surpassing physical global music revenue as the most important revenue stream in music. It will be interesting to see what Pandora's conversion rate is with free to paid users but wouldn't be surprised to find out they are bought up in the next 3 months by a larger listening platform. Ahem, SiriusXM.
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@coreycrossfield @rrhoover @johnpaul While I agree that Spotify has a leg up here, the statement that they will unequivocally "win the streaming war" is overly broad and a little too bullish on one particular company. Describing how many users Spotify currently has is irrelevant in this scenario; they can have all the users in the world, but if they don't control their own destiny (which they don't content-wise), they will have continued problems whatever the growth. Frankly, their numbers suck; yes they've had amazing growth over the last few years, but they're going to start running in the same direction as SoundCloud at some point. Yes, the reported $2.2B in revenue back in November, but $1.8B of that was paid out directly to labels, which means they only kept ~$400M, which is still a nice revenue pull, but is nowhere near the $2.2B number that they touted to the tech press. But even that's neither here nor there, since my argument isn't about Spotify vs. Pandora, but that these larger streaming services in general have structural issues in their business models. Second, I don't agree that assessing a service based on the type of user they have is irrelevant. In my opinion, that's a major mistake SoundCloud made. They own the independent realm for a long while, in a way the other services couldn't touch. But then they made the decision to move into major label material, which effectively cut off their nose to spite their face. The reason this was a major error is because they miscalculated the types of users they were willing to shun for the types they wanted to capture; independently focused artists and their fans for more mainstream artists and their fans. I chronicled the fallout I saw from this here: Thirdly, to make the assumption that older listeners want a more radio dynamic and younger ones inherently want musical curation is a thought process I'm not sure I agree with. Music isn't logical, it's emotional. It doesn't fit neatly in a box, nor does it stay static. Thus, interaction with music evolves, hence the integration of radio dynamics by some of the streaming companies which were previously on-demand only. Lastly, I agree with parts of your final point, namely, that royalties are challenging and problematic. But my read on it is a little different. Frankly, royalties are the Emperor's clothes; outdated and used, as they've always been, to mollify artists who were (are) encouraged to sign label deals which had few other benefits for them. I know artists who don't even check their stream rates on Spotify because they don't make jack off it, but have otherwise made $20-30,000 profit from touring because of how dynamics have changed. The real takeaway is that music is much more fluid than it was even 3 years ago, and the ways that things are changing all benefit the independent paradigm of artists and fans. Independent doesn't need to mean small either. It simply means in control of one's own destiny and business decisions, very much unlike the major label machine. I know plenty of artists who have signed to major labels who swear they will never go back. We'll see what happens with Pandora, but Sirius has released statements in the last 2 months saying they both will and won't buy Pandora, so I don't even think we can draw a concrete conclusion on it at the moment.
Corey Crossfield@coreycrossfield · Head of Digital, Revelation Management
@adammarx13 Starting with my first point about Spotify winning the streaming war. They will win it. Hands down. It's not bullish it's coming from experience working with all these companies, seeing them scale and how they develop their products and relationships with copyright owners and creators. None of these companies will be sustainable without working with the copyright holders in this case every record label that owns the masters or artist that owns their masters. It's in Spotify and the majors best interest to scale so when their big fat IPO comes they make money exploiting the copyright. Pandora's biggest streaming audience is between the ages of 35-44 years old. The way this age group consumes music broken up by listening service is on demand streaming (i.e. Pandora). It is actually a safe assumption to derive from this information that this age bracket wants a more radio like streaming experience because that's how they are consuming music. Streaming is sustainable and needs to evolve as the consumer does which it hasn't. There should be a mechanical royalty streaming rate. It's the new way music is consumed and that needs to happen regardless of streaming service. There needs to be an industry standard which fairly pays out a mechanical and publishing royalty with full industry transparency so the creators of the music are being fairly reimbursed for their art. Soundcloud is going to fail not because of anything you mention. It's because like most technology companies trying to scale a music product they build first and talk later. These companies (all streaming services included) build products, scale and then go to the copyright owners of the content to strike a deal. There needs to be a better way of doing this so technology can innovate music without breaking it which has been the cycle since Napster. As someone who actually works in the music industry and with all of these companies directly, I have to say the industry isn't fluid at all. If anything it's stagnant and full of insurmountable problems that until its addressed will continue to languish in purgatory. The problems facing music are so much larger than naively naming the major labels as the cause of frustration. It's also a lack of innovation in an industry where the art form is massively devalued by a consumer wherein previously the primary mode of consumption meant going to your local record store and buying a physical piece of music. Pandora and Soundcloud will be bought out at some point before the end of the year.
Matt Hagner@hagnerd
@adammarx13 2) The reason their rates were set is because they were considered digital radio (similar to Sirius XM), or non-interactive digital streaming (which essentially means you pick a station and they decide what songs to put in front of you vs interactive digital streaming where you choose the specific songs you are listening to). I would imagine for their new on-demand streaming service (which is not covered under the same license and rates) they have already negotiated and made deals with the majors/MERLIN.
Adam Marx@adammarx13 · Freelance writer/editor and music addict
@hagnerd @coreycrossfield @rrhoover @johnpaul We'll have to agree to disagree. I have other experience with many artists which I have to rely on to formulate opinions. I do think Spotify can do well, but that doesn't erase the challenges I think they will face sooner or later. Anyway, I'm always down for an academic debate, but I think we've taken up enough space on the PH comments section haha. Feel free to tweet at me. Cheers!
TJ Holowaychuk@tjholowaychuk
My thought is they should have just kept Rdio around, I liked it a lot more than Spotify anyway.
Alexander Forsén@tyckr · Prd manager Swedish Building Services
Any plans for a global release of the service (e.g. Sweden)? Rdio was available here before it went bankrupt and Pandora bought their assets.
Felipe Ricelle@philricelle · Product Manager
@tyckr I hope they come back to Brazil too. But I think it's gonna take some time. They won't even have the web and desktop apps on launch :(
Tom Bielecki@tombielecki · Cofounder, PrintToPeer
@tyckr same thing happened in Canada. Pandora is dead to me :(
Christian Schlensker@wordofchristian · Devigner
I always thought that Pandora had the best recommendation engine of all these services. The only problem was that their music selection was more limited so you would end up hearing the same tracks over and over or having different pandora channels eventually converge overtime. This seems like it would go a long way toward solving that problem. I also was a huge fan of Rdio's application. It was always the best built in my opinion. I was hugely disappointed when it got aquired by Pandora, but it seems like this is the rebirth of that application.
Zach Wendkos@zwendkos · CXO, TrueFire
A little late, IMO. Not sure what the killer feature is here that would convince me to switch over from Spotify.