Wed Feb, 2012 by Derek Mehraban
For years Pandora was the top dog in streaming music. Based on the music genome project, people tune into Pandora to listen to a particular flavor of music and then Pandora serves up other similar artists. Sometimes people even discover new artists or songs that they like through the service. Spotify came along almost a year ago and disrupted everything.
The main disruption was Spotify’s deep integration with Facebook. However, the service was lackluster and for millions of users the six-month trial service expired without any renewal or money going to Spotify. Those people are now cut off and returning to Pandora, if they had not already done so.
Pandora offers a freemium model that is supported by advertisements and some restrictions on the service. For many people these nuisances are not enough to deter its use. Pandora’s problem now is sustained losses. The free service is so desirable that most users are not forking over the cash for an ad-less and restriction-less service. Consequently, Pandora is losing millions because of the licensing fees needed for its catalogue.
The digital agency firm should consider advertising with Pandora. Pandora has an ability to send local advertising to users. Pandora’s financial woes will also make it eager for advertising inventory. There might also be some good will to be had from the consumer, by being perceived as supporting a superior service and helping to keep it free. Its lack of social media integration is being shown to not be an inhibiting factor for Pandora. When compared to Spotify’s requirement that people sign in with the Facebook accounts, it may actually turn out to be a boon. Pandora has plans, like installation into vehicles, and being in on the ground floor will be lucrative for the digital marketer.