Recently-returned Pandora CEO Tim Westergren gave a keynote speech at the Midem conference today, outlining his plans for the company, and how it hopes to be working more closely with musicians in the months and years to come.
He was interviewed on-stage by Daniel Glass of Glassnote Entertainment, who asked him to talk about whether Pandora is for sale.
“We are on a path to do something big and something for the long-term. That’s why I got back in the saddle, so no plans for that,” he said.
Westergren talked about Pandora’s current scale. “We stream more hours of music a month than YouTube streams hours of video,” he said, before explaining why Pandora is getting into on-demand music.
“There’s this huge endemic audience on Pandora, and because we know their taste, we’re going to go into that business but not like everybody else: 30m songs and a search box and good fucking luck!” said Westergren. He added that Pandora wasnts to launch a cheaper subscription than rivals too. “Multiple tiers, not just $10 a month, but something lower as well.”
Westergren said he predicts that a substantial proportion of Pandora users will be subscribers in the future. “We don’t really think that 10, 20, 30 years from now there’s going to be a dramatic change in the lean-back versus lean-in. We’re not going to sprout extra hours every day… I think it will stay in the 30-ish% lean-in, and the rest lean-back.” And that’s how Pandora sees its free versus subscription listeners spinning out too.
Westergren talked up Pandora’s music genome technology, and the way its system will identify emerging tracks that are similar to existing hits, thus putting those new artists in front of more listeners who might like their music.
Why isn’t Pandora available in more countries? “It’s a licensing problem basically. I grew up mostly in Europe, so I’m eager to get it over here. But the licence we have only allows us to stream in the US, Australia and New Zealand right now,” he said. In its first 18 months, Pandora *was* available globally, before the company started geo-blocking users.
“We’ve taken the entire globe and rank-ordered every country based on dozens and dozens of factors on where we’d go next. You can probably guess the next ten, but we’d like this to be everywhere,” said Westergren.
Glass asked about the frustration and anger among artists and songwriters about streaming royalties. Westergren pointed to his past as a musician. “I am of that world, I walk in those shoes. My intent, my purpose in building Pandora was very purposefully to make a difference for working musicians,” he said.
“It is a temple to our ethos, to our mission, to our principles… It is core to us. It matters in this world. Who does the industry want to partner with. Aligning with a company that is about music is a good thing, and I think we will find alignment.”
He noted that Pandora is a radio product – “it is fundamentally promotional” – with Westergren claiming that it’s one of the largest referrers of sales on iTunes and Amazon. “It is replacing a medium, AM/FM radio – the hours that are coming to Pandora are largely from broadcast radio – which does not compensate artists at all in the US. Every 1% of market share that moves from broadcast radio to Pandora creates an incremental revenue of $60m a year to the industry.”
He suggested that “the broader industry opinion of Pandora has come around 180 degrees” since the height of its status as a villain for creators and rightsholders three years ago – not least because YouTube appears to have seized that role in recent times.
Is there hope for a compensation model for creators to make money other than through their live performances? “If I was an artist starting out now, one I would certainly push for the migration of radio broadcast listening to the web,” he said. “That means Pandora is the music industry’s ad sales team. We have 2,200 employees or so, and about half of them do nothing but work on advertising, selling on Pandora… driving revenue, and about half of that goes to the industry.”
He added that the benefits of online listening are the analytics: knowing who’s listening and where they are in the country (and soon, the world).
At this point, artist Flo Morrissey joined the panel to give her perspective, having been walked through the Pandora Artist Marketing Platform (AMP) this week. “You can see where everybody is in the world who’s listening. You can interact, saying ‘I’ve got a show coming up’. This is a platform that looks like it would actually help artists put everything in one place,” she said.
“We are now breaking artists in the US from artists where we are not allowed to stream. So it’s not irrelevant to you,” said Westergren, addressing non-US artists.
Morrissey talked about how she feels about digital music as a creator. “There’s a sense, more in Europe, sometimes people are slightly lazy with things. I love the American drive,” she said. “I just want fans to be loyal. I just toured in Japan and seeing the passion there really hit a chord with me. That’s all an artist could want: to actually resonate. For people to come to the shows, tell their friends.”
Glass asked Westergren about competition. “What drives me crazy is there is a substantial part of the digital music world that is educating listeners to believe that they can get music for free, and for free on demand. And it takes the form of unlimited free, perpetually free trials, and poorly monetised services,” he said.
“It’s not good in the revenue it doesn’t generate, but it also creates bad habits… The industry really needs to get its hands on that quickly, before it’ll be harder to bring it back in.”
What does it take to get a user from free to paid? “Your listener on Pandora, you thumb a song and a prompt comes up saying ‘oh, that’s your hundredth thumb Daniel. We’ve taken those hundred thumbs and created five customised playlists for you with those and some other songs. And we’ve downloaded them to your phone so you can play them offline. You just have to subscribe to Pandora,” he said.
“You create reasons for them that make it relevant to pay for something… That’s how you tease people into these things. Not by saying ‘here are 30 million songs, and a search box for 10 bucks a month.”