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Pandora Media Idea Proposal

Pandora Media Idea Proposal
 

Are record labels, talent management agencies, and musicians embracing Pandora’s reinvigorated platform?

Report Available: June 23, 2016

 

Blueshift’s initial research found P undergoing new developments in its business with the acquisition of a ticket-selling company, an on-demand music platform, and the building of an artist marketing platform – all intended to appeal to record labels, talent management agencies, and musicians who can have more direct interactions with their fans through a platform that can also make them money via ticket and album sales. The company brought back its co-founder and former CEO to reinvigorate the brand which has seen listenership stall, profit elusive, and competition increase. Whether these strategies pay off depends largely on the response from music industry professionals and performers.

 

Observations

  1. P’s Q1 results exceeded expectations with revenue growing 29% to nearly $300 million for the quarter. Total revenue per 1,000 listening hours increased 14% and advertising revenue per 1,000 listening hours jumped 19%. P saw a 23% bump in ad revenue, including 42% improvement in local ad revenue. Its 79.4 million active listeners was up from 79.2 million a year ago, but down from 81.1 million in the previous quarter. With listener numbers essentially unchanged, listener hours grew 4% year to year.
  2. P co-founder Tim Westergren stepped into the role of CEO in March (one he held from 2002 to 2004) to spearhead the company in its attempt to reinvigorate the brand, grow listenership and become profitable with a focus on music and musicians. A former musician, Westergren is putting more emphasis on bringing artists to the platform, creating vehicles for them to reach fans more directly, while boosting album and ticket sales.
  3. A December ruling by the U.S. Consumer Royalty Board set music streaming rates below what artists and labels were seeking, a welcome development for P, which now must pay 17 cents per 100 streams. This is an increase for the 14 cents P was paying (and the 11 cents it was seeking), but is less than the 25 to 29 cents the music industry proposed. The ruling creates a launching point for P make deals directly with record labels. This also gives P a clearer view of its costs as it looks for sustained profitability.
  4. P acquired concert-ticket seller Ticketfly in October for $450 million and the service brought in $22 million in ticketing service revenue in Q1, which would translate to a 30% year-to-year increase had P made the acquisition a year ago. P will begin making concert recommendations into its steaming app with the hope of selling tickets and benefitting the artist, promoter, and venue. It also bought streaming music competitor Rdio for $75 million in November with plans for an on-demand subscription-based service more closely resembling, and competing with, Spotify and Apple Music. P has also built an Artist Marketing Platform (AMP), which provides artists with information on streams of their recordings, including whether listeners responded with a thumbs up or thumbs down to their songs. A new feature called AMPcast now allows artists to record messages to play for their fans, promoting upcoming albums. The company is looking to grow the platform to a $4 billion business in five years, with $1 billion coming from new services and $300 million from live events.
  5. Questions abound whether P is making the right moves and if they will translate into success for the platform. Listenership has stalled at 80 million, the company has not been sustainably profitable, and it faces competition from Spotify and Apple Music, whose on-demand services give listeners more control over their music experience. A recent report showed Spotify narrowing the gap with P, though P still maintains a sizable lead. In March, 32% of online radio listeners were listening to P in the last month (down from 34% in 2015), 13% listened to Spotify (up from 10% in 2015), and 12% listened to Apple Music (up from 11% in 2015).

 

Will labels, agencies, and musicians cut deals directly with P? Is there a sea change in the industry about the perception of P? How do labels, agencies, and musicians feel about opportunities with Ticketfly? Will they use P to interact directly with fans? Can they make money with P? What do labels and agencies think of P’s new CEO? To answer these and other questions, Blueshift will issue a market research report by gathering data from independent sources in the following areas: Record labels, Agencies and talent managers, Musicians, and Industry specialists.

 

Companies: Pandora Media (P)

 

Research Begins: June 6, 2016