Internet radio keeps surging; it appeals to more people now than ever before in history. And one of the biggest beneficiaries (and drivers) of this growth has been Pandora, whose active listener base nearly doubles every year. Yet Pandora is still profitless, still boxed out of Britain, and a dog on Wall Street. So what's wrong with this picture?
Part of the problem is an aggressive-and-rising royalty structure, and a cost structure that rises with every new listener. But this format has been broken for a while: Pandora has struggled to get people to pay for premium, ad-free streams, despite lots of attempts. Which puts even more pressure back onto advertising, and more invasive formats like in-stream spots.
But wait: Pandora's already turned into Times Square, its app is choked with marketing messages! Not only that, some listeners have been lashing back against heavy advertising levels, with in-stream ads one target. Which has caused competitors like Clear Channel's iHeartRadio to put the brakes on upcoming rollouts. “There are a lot of negative comments about in-stream ads,"Clear Channel CEO Bob Pitman told the Associated Press, who's already singling out Pandora as “a cautionary tale."
The sad part is that Pandora probably has little choice in the matter, and the company is strategizing ways to squeeze even more advertising juice out of its streams. Part of the solution comes from smartly attacking traditionally 'terrestrial' radio advertising locations, and demo-targeting ads within specific regions. But mood-killing, in-stream audio ads are also seem to be a major growth area. “Prior to 2011, Pandora allocated less than one minute of audio advertising inventory per listening hour," analysts at Research and Markets shared with Digital Music News. “[Yet] audio inventory expansion to 6.2 billion avails per month in 2012 is projected, driven in part by Pandora's increasing focus on the in-stream audio format."
Which means less music per hour, and more reason for now-spoiled music listeners to switch to something else (free or paid). But it may also mean survival for Pandora, even if it pisses off lots of listeners along the way.
Part of the problem is an aggressive-and-rising royalty structure, and a cost structure that rises with every new listener. But this format has been broken for a while: Pandora has struggled to get people to pay for premium, ad-free streams, despite lots of attempts. Which puts even more pressure back onto advertising, and more invasive formats like in-stream spots.
But wait: Pandora's already turned into Times Square, its app is choked with marketing messages! Not only that, some listeners have been lashing back against heavy advertising levels, with in-stream ads one target. Which has caused competitors like Clear Channel's iHeartRadio to put the brakes on upcoming rollouts. “There are a lot of negative comments about in-stream ads,"Clear Channel CEO Bob Pitman told the Associated Press, who's already singling out Pandora as “a cautionary tale."
The sad part is that Pandora probably has little choice in the matter, and the company is strategizing ways to squeeze even more advertising juice out of its streams. Part of the solution comes from smartly attacking traditionally 'terrestrial' radio advertising locations, and demo-targeting ads within specific regions. But mood-killing, in-stream audio ads are also seem to be a major growth area. “Prior to 2011, Pandora allocated less than one minute of audio advertising inventory per listening hour," analysts at Research and Markets shared with Digital Music News. “[Yet] audio inventory expansion to 6.2 billion avails per month in 2012 is projected, driven in part by Pandora's increasing focus on the in-stream audio format."
Which means less music per hour, and more reason for now-spoiled music listeners to switch to something else (free or paid). But it may also mean survival for Pandora, even if it pisses off lots of listeners along the way.
