Offline Listening of Favorite Music Tracks Tops List of Pandora Plus Updates
Pandora executives detailed changes in its usage and business models (see 1609150046) on an investor call Tuesday and at the Goldman Sachs Communicopia Conference in New York Wednesday. During both events, presenters showed a 10-second Taco Bell commercial that's representative of the video ads designed to help increase advertising revenue in the company’s still-free ad-supported service, the primary breadwinner for Pandora's foreseeable future. Also at the conference, executives from AT&T (see 1609210048), Comcast (see 1609200042) and other companies spoke.
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Ad-supported users will get an upgrade in features, now being able to skip a set number of songs and hit a replay button to hear the most recently played songs in exchange for listening to a video ad, said Chief Financial Officer Mike Herring at the Goldman conference. In the demo, the ad started immediately, which Herring said is critical to user retention. Before, if a listener heard a song one loved, “it was all about discovery,” said Herring, and a listener couldn’t share that song with a friend. That led listeners to pause Pandora and go elsewhere -- Google's YouTube or a pirate website -- to hear the song for free on demand. Some of those users never came back, Herring said. The company’s goal is to boost listener loyalty with reasons to stay.
Pandora Plus users, who automatically will be upgraded to the $5.99 per month service from the old $3.99 monthly Pandora One service, will move up to unlimited song skips and the replay service, plus an offline listening option for times when they don’t have a cellular connection or want to save on data usage, Herring said. In offline listening, Pandora will give users access to three of the user’s stations based on recent listening patterns, plus the user's Thumbprint Radio station, a personalized station with a playlist of songs subscribers have tapped with the thumbs-up button. Also, if users lose a signal while listening to Pandora, the user's device automatically will switch music to one of the four available stations, Herring said.
Of Pandora’s stated revenue goal of $4 billion by 2020, the company’s radio business -- comprising the ad-supported and $4.99 per month Pandora Plus -- is forecast to account for $2.4 billion, said Herring. Some $1.3 billion will come from the upcoming $9.99 per month on-demand service intended to take on Spotify and Apple Music. The remaining $300 million is staked to Pandora’s Ticketfly business. “We’ve got four years to grow to 100 million [users],” said Herring. The company’s efforts to increase presence on devices in the home and in cars and new features that are not “forcing people out of Pandora but keeping them in” will help the company reach those listener numbers, he said.
On opportunities for higher user engagement in cars, Herring acknowledged Pandora is in “only a handful” of cars today because cars don't offer the consistent audio stream of FM or satellite radio or SiriusXM. “When it’s an always-on situation, engagement and usage skyrockets,” he said. Getting there is “slow to develop,” he said of internet connectivity in vehicles, citing long product cycles in the automotive world. “That doesn’t mean adoption isn’t growing, it’s just harder,” Herring said. Listeners expect Pandora radio “to work like SiriusXM or FM."