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Pandora Radio Is A Different Business Model Then Apple or Spotify

Recently I have been messing around with Pandora and their full music service and I have to say it has a great look and feel. Pandora is considered the godfather of music streaming as they were one of the first music streaming services online. Pandora has struggled in recent years with Spotify and Apple Music growing in numbers but it’s important to remember Pandora is an internet radio company and makes the majority of their revenue on ads.

Recently in their earnings report, Pandora mentioned they have about 5.5 million subscribers to their paid services. Pandora does two paid service tears one being Pandora Plus $4.99 which is internet radio only with no ads or Pandora Premium for $9.99 being their fill on music service. Pandora has not disclosed which service has the majority of subscribers. Apple has over 40 million subscribers and Spotify has 70 million subscribers making it look like Pandora has little to no market share.

Pandora has mentioned that they have over 90% of users listening through mobile which is very impressive, to say the least. Pandora who does make a majority of its revenue via advertising like most radio companies. Back in September SiriusXM invested $480 million dollars in a strategic investment with Pandora. Then in March Pandora acquired tech startup AdsWizz.

AdsWizz tech aligned with Pandora’s specifically in the areas of audio monetization and ad-buying capabilities. Pandora says that it will continue to invest in AdsWizz technology that supports its core business.

It’s important to realize that Pandora has 74.7 million active users which is a drop of about 6% compared to the previous year. It’s import to realize that Apple and Spotify offer artist based radio which can and has hurt Pandoras business. When you are comparing Apple Music to Pandora it can be hard because Apple Music makes no money on ad revenue. Spotify does have a free version with ad revenue but Spotify and Apple rely mostly on subscribers.

I think Pandora is a great streaming radio service and is great at that particular service. I do think Apple and Spotify have a stronger hold in the music industry then Pandora but Pandora has great brand recondition and is great for the casual music listeners. As long as Pandora can continue to make money on ads using their current business model they will do fine in the long run.

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