Pandora had some big announcements last week that sounded an awful lot like they’re channeling broadcast radio.
First, they walked back their 40 hour limit, installed just six months ago. At the time, we described limiting listening as being almost un-American. They must have come to that conclusion, too.
Chief Strategy Office Tim Westergren rationalized the reversal by noting that only 4% of Pandora’s monthly users will be affected. I’d call that little group Pandora Super P1s – some of the most important consumers they have. They’re the last ones you’d want to send away to Spotify…or iTunes Radio.
And second, they’re going to up the spotload. Every commercial radio broadcaster had to be smiling at that one. That’s because there’s only one sure way to drive revenue when your cost of doing business is sky high – run more units.
Again, Pandora is explaining that move away by noting that listeners like longer sweeps, so five spots an hour – now with back-to-back units – will work well.
Right.
Program directors across the land all know that this is only the beginning. Next year, six. Then seven…
Listeners see through those games – there’s always a price to be paid for more music. And in the process, the Consumer Experience suffers. Our last Techsurvey already picked up on dissatisfaction with Pandora commercials.
Sounds like slippery slope time.
Welcome to radio.
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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I can’t wait until they start doing remotes.
LOL – Van hits and free pizza!
Don’t forget balloons for the kids… “There’s a lot going on here at…”
Good one!
When will “value added” enter their sales lexicon?
There there’s the famous “we’re broadcasting live” (as opposed to dead). And then there’s “be the tenth caller”…
On a serious note, Pandora is faced with onerous royalty rates and has no choice but to push the envelope in trying to max out revenue any way they can. Radio had and has other options…like improving the consumer experience.
Well their CEO insists on calling pandora “Radio”. So I guess he will learn what that means now. Oh and, nice to see they finally feel they need to make a profit and not just operate in startup mode TFN.
Spot-on, Jack. Welcome to the realities of “radio.”
Radio has better options than perhaps many think – including some of those working in radio. When your only revenue silo is streaming, adding units is the only choice.
“That’s because there’s only one sure way to drive revenue when your cost of doing business is sky high – run more units.”
That’s true for terrestrial radio but for online radio – or online audio entertainment if you don’t like calling Pandora “radio” – there is subscription revenue. Ad-supported entertainment is only free if you don’t place any value on your time. I don’t know what mine is worth exactly but it’s worth more than $36 a year which is what it costs to listen to Pandora Ad-free.
Correct about Pandora One, Jerry. More and more, it is hard to imagine why people would pay for commercial-free Pandora.
Fred – (Sorry for the length of this)
When I first heard about this and then watched Pandora’s CFO interviewed on Bloomberg last Friday, I shook my head and said “Pandora – what are you thinking?” You see, Pandora is converting only 4% of its 71 million users into subscribers. This stat alone tells me all I need to know about user satisfaction with Pandora. A lack of conversion is THE red flag for product problems. And now they are doing the one thing that will cause further listener dissatisfaction and possible erosion of that huge cume…more unwanted interruptions on their free service.
Pandora’s approach to its users is at the heart of their product issues IMHO. A recent article in FastCompany – At Pandora, Every Listener Is A Test Subject, this line said it all…”At any given moment, the company’s data gurus and engineers are running dozens of experiments on its vast user base”. Really? Experiments in bad programming to see their reaction? I was surprised by what I read on this link.
https://www.fastcolabs.com/3015729/in-pandoras-big-data-experiments-youre-just-another-lab-rat
Broadcasters are fortunate that Pandora is moving toward them and not further away. There is so much we have learned in radio that Pandora doesn’t seem to know; like how to quantify a listeners passion for the music, they don’t know what repetition is really about, they focus on programming qualities that are not user priorities and have not figured out what the most important music value proposition is. Running experiments will not get them the answers they need. Algorithms and the musician-musicologist-expert technique is not getting them there.
If I were at Pandora I would make my priority increasing the subscription rate 5x not going to 5 commercials an hour with double spotting. But this will only happen if you have listeners as partners not lab rats. Imagine if Pandora users were passionate to the point of fan-dome like Apple fan-boys are. That’s what is necessary. People are passionate about music, it could be done.
Instead like many before them, they are succumbing to the pressures of Wall Street to get more revenue at any cost and by next quarter. When listeners react badly to this experiment of increased and back to back commercials (and they will), only then will Pandora realize what a costly and lasting mistake this is for short term gains.
The length is secondary because your observations are excellent, Mike. I think that the abundance of reactions from radio people we’re getting from this post has more to do with the way that Pandora has poked at broadcasting during these past few years. There’s nothing wrong with aggressively creating a new and different challenger. But when increasingly, features, tactics, and the overall sound continue to mimic that medium you’ve promised you’ll improve upon, that’s why the comments are flying.
To that point, Pandora is still running many fewer commercials than the average music stations, but when you start seeing increased spotloads and clustering of commercials, the similarities are too obvious to be ignored. Your article from Fast Company addresses the issue of repetition (among other things), and that’s another area that begs comparisons.
Pandora claims the audience isn’t complaining, but our (admittedly radio-centric) sample in Techsurvey9 suggests something else. We may learn a great deal about the importance of the CX from this exercise.
Thanks again, Mike, for the thoughtful comments.