Pandora: “No international expansion”
August 27, 2013
By Chris Forrester
Pandora Radio is an on-line and wireless automated music recommendation service. It offers two subscription models, a free service with advertising support, or a paid-for service without ads. Just over a year ago at its IPO it had 800,000 song titles on offer, and millions of users in the USA. Today’s count (as at July 31st) numbers “active” listeners as 71.2 million, who between them have created 5 billion ‘stations”, its in-car equipment is fitted in more than car models, and the service has expanded to Australia and New Zealand. Users can ‘buy’ a song, as well as listen to the dynamically created play-lists of their choice.
Pandora has gone from zero to a 70 per cent market share in barely three years (although it initially launched some 8 years ago) and the average listening time per user is now 17 hours a month. Pandora, if it were a single radio station, would now be the Number 1 station in most US markets, and it has a 7 per cent share of the audience. Most of its revenues come from advertising at a rate of 3.5-4 ads per hour.
Indeed, chairman and CEO Joe Kennedy told analysts August 22nd on its results conference call that revenues were up 26 per cent higher than any previous quarter, and at 92 per cent up y-o-y at $116 million. Kennedy said that the current 40 hour listening time-limit of the ‘free’ service in vehicles was being scrapped on September 1st. Kennedy expects revenues in this full year to be around $640 million – $655 million, up around 50 percent y-o-y.
Kennedy said that Pandora was happy with progress being made in its two international markets (Australia and New Zealand), but was silent on any other expansion plans. “We continued to be both patient and opportunistic in terms of our position with other markets and continue to have exploration there but there is nothing to share or update on at this point in time.
Pandora Radio is not alone in the market, and has the added threat of an Apple-backed iTunes system. Kennedy said: “We think that this market is going to continue to grow pretty dramatically as the shift from broadcast to connected radio and the advertising dollars is going to be a big one. And Apple’s entrant highlights the advantages of it. It highlights the future of connected radio as a primary advertising vehicle, and we believe we are going to play an important part of that for a long time to come. And so that to the extent it expands that, it will help our opportunity.”