Pandora’s move towards becoming an on-demand streaming service is following the template in one respect: details of its licensing deals appearing in the US media while they’re still being hammered out at the negotiating table.
“Pandora is close to reaching deals with major record companies that will allow it to do so both in the U.S. and in new overseas markets, though the agreements haven’t been finalised,” according to the Wall Street Journal’s sources.
That’s no surprise to anyone who’s been listening to Pandora executives talk at conferences or in investor calls this year, but the WSJ story included a more surprising claim: that Pandora could launch its on-demand tier as soon as next month (September).
That is earlier than expected for Pandora’s dual expansion: into on-demand streaming as well as new markets outside the US, Australia and New Zealand. Previously, the company had appeared to be leaning towards Q4 for its expansion.
“We absolutely are committed to and believe we’re optimistic we’ll achieve a timeline where we can launch products by the end of this year,” CFO Mike Herring told analysts in July.
“We are focused on rolling out the new on-demand product in our existing markets first, but absolutely see global as part of our path to 2020 and we’ll be working with the industry on those licensing deals going forward,” added COO Sara Clemens.
Pandora may still be planning a two-speed expansion: on-demand in the US this year, plus global expansion of its free tier in 2016 and on-demand following in those markets in 2017.
That would make strategic sense, since Pandora has been talking about its free tier as the all-important base from which to upsell its listeners to premium subscriptions.
“We are a pyramid, not a funnel. A pyramid with a large and sustainable base upon which to build new businesses. We are upselling listeners, not trying to catch them as they fall,” said CEO Tim Westergren in April this year.
“Our acquisition costs are vastly lower [than rivals] because they’re essentially negative in the context that we make money from the 80 million people listening to our radio product.”
All eyes on September to see if he was right.