New Pandora Filing Gives More Details
As most people who follow the media are aware, Pandora is in the midst of trying to go public. This event has given perhaps the best insight into the financial workings of an Internet radio company yet. Pandora represents one of Internet radio’s largest companies and insight into their business gives satellite radio investors a look into the business model of Internet radio as well as more details about a company that will increasingly be seen as a competitor.
On April 4, 2011, the company filed an S-1 form with the SEC. The document (well over 100 pages) gives us even more insight than before. Some interesting tidbits from the filing include the number of registered users, amount of listening, revenue derived, and their royalty rates.
One common misconception about Pandora is the royalty rates the company will be paying. The S-1 filing spells this out quite clearly on page 74 of the document. Pandora opted out of the CRB rate and negotiated separate rates for their subscription and non-subscription models. As you can see the rates for non-subscription listeners is far less than the CRB rates.
Another aspect about Pandora that is heavily debated is their number of registered users and the number of hours people listen to the service. The company now reports 82 million registered users and defines a registered user as anyone who has opened a Pandora account. These “registered users” listened to a total of 3.9 billion hours of music in the past year.
This equates to 47.56 hours per year per registered user, or less than an hour per week. In contrast the recent Arbitron Infinite Dial Study outlined that the average person tunes into radio 9.47 hours per week. Given these two statistics, we can assume that the vast majority of Pandora’s “registered users” do not actively listen to the service. In fact, if we do some rough basic (rough) number crunching the number of active users could be in the neighborhood of 8 million, with actual paying subscribers likely somewhere between 500,000 and 700,000.
Another interesting aspect of Pandora’s business is their shift toward a subscription model. In the past two years the company has seen revenue from subscriptions increase from 6% in 2009 to 9% in 2010 to 13% in the most recent year ended January 31, 2011. Clearly the subscription revenue is a growing part of the business and will continue to be an increasing part of the Pandora business model moving forward.
In the past year Pandora was able to generate $137 million in revenue and posted a very modest loss. The company is on the verge of profitability and given their ability to generate substantial revenue from a modest amount of advertising, they could be a profitable concern as early as this year. Certainly Pandora will oft be spoken of in the same circles as Sirius XM and other media companies going forward.
Position – Long Sirius XM Radio
and?
So only 8 Million actve users, about 10% of registered. That is pretty bad for a service that is basically free.
In fairness the 8 million is arrived at by using Arbitron’s 9.47 hours per week divided into Pandora’s 82 million figure.
Another way to look at this is that ARPU on those 8 million would be about $1.14 per month. With their subscription model increasing, that ARPU will rise over time. The company had revenue of $137 million in the past year
“we can assume that the vast majority of Pandora’s “registered users” do not actively listen to the service.”
OR they just listen less. Their service is not the same as traditional radio’s 9.47 hours per week. I listen to mobile radio apps (siriuxm/slacker/pandora) for about 2 hours per month but, I do listen.
There could easily be 40 million active users. I don’t know that there is but 8 million is a very low assumption.
The 9.47 hours per week was specific to Internet Radio listening
Does that include mobile?
It is use of Internet radio services and thus would include mobile
please change the website name please:
PANDORA BUZZ
INTERNET RADIO NEWS
sorry that you do not like to hear about the competitive landscape and you find that knowing the competition is not useful. This site is reports on the media landscape and items that may be of interest to those invested in SIRI. If you want a cheer-leading site that simply blows smoke there are certainly some of those around. Serious investors prefer not to keep their heads buried in the sand or get lost in the clouds….on the other hand some Sirius investors simply do not want to hear about anything but SIRI and how every other media medium pales in comparison. There are sites for that.
spencer, i have been an investor in siri since 2009 at 44 cents . of all the siri blogs , you guys are the only ones that have a true view of siri that is helpfull to me as an investor. the fact you give me facts about other companys that could be a threat to siri , and lets me make think about the big picture , i thank you for that…….johnny
i get it. i enjoy your articles but the way you write about pandora is like you have a crush on the service. i guess i look for more hardcore news. crush the competition stuff. by the way, i think we are neighbors. i live on the cape?
No crush on Pandora…..In fact i rarely use it.
Yes, we are neighbors.
Spencer, I find your articles very helpful and I have been a SXM investor since 2005. However, I have always believed that it self defeating to keep one’s head buried in the sand when it comes to one’s money. It is extremely important to know what the competition is up to if one wants to make money. The old adage to “to keep your friends close but keep your enemies even closer” is most important in keeping on top of one’s investments. Appreciate all that you do here.
Ya, it takes a rocket scientist to realize that Spencer, but thanks. 10 of those “registered users” who listen zero hours a week are me. Registering for not remembering passwords, user names, or whatever. I dont use it anymore but I had off and on. As the numbers show, pretty much everyone tried it out. Not many use it. I gave a guess to actual users, I was high. Pandora can generate 127 million in revenue and not make money. I dont see the upside much higher than that on revenue. Too many simliar services.
As for the 8 million active users, less than 1 million people are probably using it at anyone time. 35 million people listen to sirius xm, and 20 million PAY for it. No, pandora for the 100th time, is not competition. They arent a radio company. Cant you get that? I heart radio is competition for sirius xm, that is radio. Now if your going to tell me the concept of radio will die, I will say prove it. Show me the evidence that the radio concept is dying out. Dont tell me about pandoras pathetic numbers.
Relmor….
Not many use it? I think the numbers speak otherwise. There were 3.9 BILLION hours of Pandora listened to in the last year! Sirius XM has about 16.6 million self paying subscribers.
How can you say pandora is not competition???? That is the most foolish assertion out there! Sirius XM even surveys their own subscribers on what they like about Pandora.
Define radio…. Does the classic definition apply in this day and age? I think not. People who are pegged into the definitions of yesteryear are well behind the curve.
Have I said radio will die? Nope… I do say that it has morphed into something new though. I can prove it by showing you that MILLIONS listen to internet radio every day.
Radio plays content, has DJs, has contests, call in, and audience interaction. Have news weather and sports. Also original shows. Thats radio. ItsTV with no picture. Pandora is a cute little company that plays random songs. Not radio. How hard is that to understand? Talk about me being obtuse.
No, like I said, thats not a lot. And most of there users that are subs are puying $1.
Not competition. Ill say it 100 times more. I heart radio is. CC is. Pandora is compeition for Slacker and other similar services.
relmor….
Interesting….does radio need to play advertisements, or can it be commercial free? You see, until Sirius XM came out with commercial free, the definition of radio included advertising.
Most sirius XM DJ sets are pre-recorded!!!! Does that conform to what radio is? How many Sirius XM channels can you “call in”? The answer is very few.
Slacker has news, sports, and comedy. Does that make it radio? Is radio about the music, or the other stuff?
Pandora is “a cute little company that plays random songs”???? THAT IS AN IDIOTIC STATEMENT. Yes, I am saying only an idiot would say that. If that offends you, so be it. The songs are far from random. You clearly have no idea what you are talking about.
IHeart radio bought Thumbplay for one reason… to be more like Pandora!!!
You simply are stuck in your love for Sirius XM as it exists and fail to see that some aspects of the service can be improved to be more like what consumers want.
Slacker doesn’t play random songs, nor is their content limited to music, nor are their subscribers paying $1. All of those statements are false.
I assume, based on your experience in the sector, that you already know that so, why frame, what seems like an agenda, with lies? Very strange.
I agree 100%. pandora is a sophisticated jukebox. Nothing more. The semblance is, to some degree, between lightweigh and heavyweight in boxing. Even those still have much more common than siri and pandora. Pandora’s competition is itunes, slacker, etc. Siri’s competition is terresrial radio, including hd. If folks want to entertain themselves with music, they will do so using pandoras and itunes. If folks want to entertain themselves with MUCH more than music, they need siri. This is as simple as night and day.
1. What about catering to those who simply want music? It seems to me that those people are a significant portion of the market.
2. Slacker is now offering more than music. Maybe its a matter of time before Pandora does the same. Or maybe Pandora has decided they want to attack the music only market (maybe its bigger than the “MUCH more” than music market?).
Spencer, you are comparing apples and oranges. First, however, let me acknowledge that I partially disagree with Relmor on the competition aspect. Pandora is in a very broad sense competition for a PORTION of SiriusXM’s business. It’s like the bagel shop is competition to the grocery store, both sell bagels, so they compete as to bagels, but not as to everything else.
But, there is a point that Relmor sort of raised as a side issue, but I think trumps all these other discussions, that being the calculations of subscribers:
You say “There were 3.9 BILLION hours of Pandora listened to in the last year! Sirius XM has about 16.6 million self paying subscribers.”
Relmor says “35 million people listen to sirius xm, and 20 million PAY for it.”
Yes and yes, but entirely apples and oranges.
Never is it acknowledged, but certainly it is true that while Pandora’s listeners are over counted, SiriusXM’s LISTENERS (as opposed to subscribers) are under counted.
I have a subscription to both SiriusXM and Pandora.
I listen to Pandora infrequently, usually only if my SiriusXM stream is not working. Importantly, when I do listen to Pandora, again, very infrequently, it is I AND I ALONE that is listening to it.
On the other hand, when I listen to my SiriusXM, a good portion of the time, others are with me listening to the SiriusXM broadcast as well as I.
As such,
1 paying SiriusXM subscriber is = to > 1 listener.
and, 1 Pandora subscriber is = at most 1 listener, probably = < 1 listener.
Therefore, the number of LISTENERS of Pandora is over counted and the number of LISTENERS of SiriusXM is under counted. Relmor is on to something in this regard.
Good points, but you must acknowledge that the competitive landscape is morphing. When you sit in a 2011 car and you have a Sirius XM, Pandora, and Slacker icon on your touch screen for radio listening, they are far closer than a bagel shop and a grocery store. I would say more like a bagel shop and a doughnut shop.
Relmor stating that 20 million pay for it is simply wrong. 16.6 million pay for it. Others are receiving promotional trials that are paid for by OEM’s and/or Sirius XM.
The statement that 35 million people listen is simply Sirius XM stating (after research) that 1.75 people listen per account. How accurate is that? We just have to take it for what it is. Most of my Sirius XM listening is when I am alone in my car. Sirius listeners are not under-counted. The company uses that listenership ratio all of the time.
All of that being said, my stance is that Pandora will exist for quite some time, and will become more viable with today’s smart phones and added capabilities in cars.
Ya, I agree, RADIO is evolving, its called Sirius XM Radio.
See, you are so in love with your investment that you can not see beyond what sirius XM currently has. Thankfully mel has sense enough to recognize that sirius XM can be more….of course those changes could disqualify sirius XM as radio in your eyes though.
You should try to be more of a person with vision and less of someone who seeks the status quo
Spencer Osborne, most of your articles are feared mongering based.
If you carry fear that is your issue. Thus piece simply points out data about a company that is viewed as a competitor to sirius XM. I have no fear about it. I simply like to know the landscape. What would cause fear is uncertainty.
Spencer, if you’re trying to survey the landscape, then you have it exactly backwards. Given the Sirius XM mobile apps, Sirius content, and the advent of Sirius 2.0; if Internet radio does survive the demise of unlimited data plans, then Sirius threatens to overwhelm Pandorka, and not the reverse.
You spin it your way, and I’ll be “a person with vision” and spin it mine.
I have never stated that Pandora will overwhelm Sirius XM, nor that Sirius XM would overwhelm Pandora. There is room for several companies in the landscape.
I am not a huge user of Pandora. For Internet radio I lean toward Slacker and Mog.
What I look at is the overwhelming popularity and name recognition that Pandora enjoys. The company will always be here, and today services like Sirius and Iheart radio are trying to emulate some of the aspects that make Pandora and other popular.
People seem to assume that I love Pandora. The fact is that I am not a big fan of the service. However, as an investor I can see the cache that Pandora has. I can see some capabilities that services like Pandora offer that Sirius XM does not. I would love to see Sirius XM add some of these features. I want to skip songs….I want to customize a channel.
Your first sentence above makes no sense — Pandora overwhelming Pandora? “I have never stated that Pandora will overwhelm Pandora”
Pandora will always be here? Just like Beta video, or pet rocks, or Studebakers? And if unlimited Internet plans disappear as bandwidth becomes scarce and infrastructure costs escalate?
Any wannabe can do what Pandora does, so come on, Spencer, where’s that vision you seem to want in others?
As I said, it is Pandorka who should be worried about Sirius XM, and not the other way around.
Clearly you have not researched things very clearly or have been paying too much attention to idiots telling you the elimination of unlimited data will be the death knell of Internet radio.
95% of the users of Internet radio do not even come close to the 2GB limits established by some companies. Only IDIOTS make such statements.
Any wannabe can do what Pandora does???? Another genius statement!!! Do you comprehend what it takes to legally create an Internet Radio company? The deals with OEM’s, deals with gaming systems, DVD players, television manufacturers?
WAKE UP
Nice edit. No charge for that one.
So, do your Comment Guidelines apply to you too?
Methinks the lad() doth protest too much. Assuming that 2 GB limits will remain in place, assuming that charges for using less than those 2 GB will remain low even in the near future, assuming that Sirius XM and others would have enormous difficulty in doing what Pandora does (and better, I hope), and all sorts of other assumptions above seem to me to reveal much more about the author’s biases and shortcomings here than any sort of reality we need to “wake up” to. As I said, where is that vision? Things change. ___ happens.
rick….
clearly you have consumed some kool-adie served up by a satellite radio cheerleader and parroted it as some sort of gospel. There will always be sheep in this world.
My bias? What exactly is my bias? I wrote an article about an S-1 filing of a company that competes with Sirius XM. I did not slam the company so some people who cant stomach a competitive landscape get their panties in a bunch. Happens all of the time. You just jump to conclusions, do no research, and stomp your feet.
All of that and you continue to want to look foolish. I said idiots make such statements because it is true. Idiots run about spouting that the elimination of unlimited data plans will be the end of this service or that service when ALL evidence is to the contrary. The average smart phone uses less than 300 MB (.3 GB) of data each month, well below the 2,000 MB (2GB) that AT&T allots.
And again, you make assumptions that things will not change, and use that as a basis for making abusive comments about people. Feeling backed into a corner and a bit defensive about beliefs, are we?
At least sheep make wool, rather than spending all their time woolgathering.
not feeling backed into a corner at all. I am fully confident in my stance. It actually is the same stance Sirius XM has.
And I have a question above that has not yet been answered: do your “Comment Guidelines” apply to you? It seems to me that using words like “idiot” and making the sorts of comments you have here to describe those who you disagree with undermines any sort of credibility you might be trying to claim with your satellite radio “news” header. How long will the WSJ continue to refer people to your site if this keeps up?
I addressed your comment guidelines question above, but perhaps you missed it.
I did not call you an idiot. I asserted that an idiot would make certain assumptions when everything in the industry states otherwise. If you felt that I was calling you an idiot then that is your issue not mine.
Why is it that Mel Karmazin can list Pandora as competition, send surveys to subscribers asking about what Pandora features we like, and state that he can offer some of these capabilities and you take no exception to that?
Only an idiot would assume that the industry does not have a vested interest in certain things, or that industries have never been wrong in the past. Or, for that matter, that entire industries have not issued misleading or completely incorrect statements.
“If you felt that I was calling you and idiot then that is your issue not mine.”
An interesting article from PC World, which discusses different data plans and demonstrates the number of downloads for different types of data. Salient points are as follows:
1. tiered data plans are becoming the norm
2. lower tier plans are very limited in their data usage (200 MB per month, for example)
3. data usage typically doesn’t hit the limit in higher tiers, but is growing quickly. “Mobile data users pulled down 230 percent more data in this study than when Nielson did the same study a year earlier”
In other words, blithely assuming that Internet radio will continue to grow, or even be viable, fails to take into account current trends, and the opinions of some very knowledgeable “IDIOTS.”
http://www.pcworld.com/article.....nload.html
Even at 230% more people are not touching the 2GB limits. As I have stated, 95% of smart phone users do not exceed 2GB in a month.
I am a HEAVY data user (with an unlimited plan) and have not gone over
Sprint has unlimited plans
Verizon has unlimited plans
T-Mobile has unlimited plans
Didn’t you say they were disappearing?????
Again, you need to follow the industry.
No, I am not a follower, as some apparently are. I tend to look forward at the implications of current changes and trends. Predicting the future may be a risky business, but predicting that things will not change is even more risky. Unlimited plans are on the way out (and in fact, most of them aren’t unlimited anyway), and the AT&T usage calculator available at the link I provided earlier shows just how easy it is to go over the limits that are currently in place.
Wake up, Spencer. The future is full of changes, and only an idiot would think that things are going to stay the way they are. Contrary to your claim in the “news” item, Sirius has no competition from Pandora.
And regarding Mel, do you have any understanding at all of the politics and posturing required in order to satisfy regulatory agencies? Only an idiot would not.
Rick…..
My apologies for stepping away from our dialogue. I had to go have dinner. I Actually like most of what you say here….
Unlimited plans will exist for a while yet as companies find what consumers are willing to pay. Personally I will always keep an unlimited plan. Sprint right now carries no restrictions on their plan, advertise it, and is gaining traction.
I fully understand the posturing that needs to happen. That is why I also mentioned the subscriber surveys the company is conducting. They WILL be offering pandora like services. They HAVE to.
On the other hand, the idea of putting caps on plans is also “gaining traction.” If providers can make a strong enough case that the level of usage is directly related to their costs, then the regulatory agencies must either allow them to raise prices, to implement caps on usage, or some combination thereof as a matter of course.
I do agree with this comment, Spencer:
“Certainly Pandora will oft be spoken of in the same circles as Sirius XM and other media companies going forward.”
It will be spoken of as just another example of an overhyped Internet failure, except by idiots.
IMO pandora is not over-hyped. They have brand and name recognition and many users who simply love the service. There is a reason that seasoned radio companies like Clear Channel and Sirius are trying to implement some aspects that pandora has in their own models.
Um, can you please provide the stats to show exactly how many users “simply love the service.” Or is that just a personal impression?
Are you really going to debate this? Do you think people listen for 3.9 billion hours for no reason? I stated many people love the service…a simple statement backed up by the fact that millions use it.
As I thought…no hard data. Spencer, millions of people use toilets too, but that doesn’t mean that they love their toilet (although a few have been known to hug them late on Friday night).
Rick…your assertion is foolish.
If I say many people love dunkin donuts would you debate it?
If i say many people love starbucks would you debate it?
Your request for “data” as to whether many people love pandora or not is laughable! Of course many people love the service.
Jacobs media, arbitron, and many other companies have conducted surveys. You can google them at your leisure….my time is more valuable than conducting nonsensical research for you
Still no hard data, but I suspected as much. And I rather thought my toilet example would leave you flushed with excitement.
Rick is technically correct. Although, based on his logic, we can not assume anyone loves sirius xm or pandora. Fair enough.
If I say I love Pandora and Sirius XM you could definitively say that a “person” loves Pandora. If you can find one more, you could definitively say “people.”
Rick…
No data needed. What I state is common sense. You are simply looking more foolish. Type in google and you will find all of the data you need
Sirixmfan….
Technically rick is NOT correct. Here on this very site there have been people that say they love pandora. Rick’s argument here is laughable and foolish.
I know. I was making the point, that by his logic, there is no data to backup that anyone “loves” Sirius XM either.
Spencer, Spencer, Spencer. Do you know the difference between anecdotal comments and “hard data?” Googling “I hate Pandora” brings up comments contrary to the ones to which you refer. You claimed that Pandora has many users who simply love the service (I won’t even get into the double meaning there). So, how many people love the service?
And, Spencer, you might wish to think about what some people think of “common sense,” in case you ever need to do something uncommon rather than follow the crowd.
Rick
You certainly provide me with a good laugh. I stated many people love pandora. That is a fact. Many people also hate it. Another fact. The same holds true for Sirius XM. Many people love it and many people hate it. Now you want the definition of many. Do you comprehend how foolish you look with your stance?
I pointed you to jacobs media and arbitron for data and those simple instructions seem to have been above your level if comprehension. I have been following these things for quite some time and know by those I speak to that many people love Sirius XM, Pandora, Slacker, MOG, IHeatRadio, etc.
Your assignment is to look up the definition of many.
Rick….
Let me wall you through this.
1. Go to the search bar in the upper right corner of this site and type in, “infinite dial”
2. Click on the SiriusBuzz article about Arbitrons infinite dial 2011study.
3. At the bottom of the article click om the pdf link to the study.
4. Scroll down to page 68 and see that 32% “love” pandora and 39% “love” sirius XM
No need to go any further
So, exactly how many Pandora users simply love Pandora? Come on, Spencer, you made the comment, so I assume that you have the data to back that up. What is the current number, or are you just making comments again based upon personal opinion?
Thanks for a real response.
Oh, and this was a Freudian slip if ever I saw one: “Let me wall you through this.”
There, another edit for you, no charge. According to my latest local poll, many people simply love your typos.
He gave you the stats you dolt.
“4. Scroll down to page 68 and see that 32% “love” pandora and 39% “love” sirius XM”
I don’t know who is dumber, this guy with the agenda or Spencer for even responding to him.
No, he gave me someone else’s stats. I asked for his.
Gee, Spencer, if Bloomberg says this in 2011 — “Even now, though, Pandora is no sure bet. The company lost $328,000 in the first three quarters of last year and expects to rack up more operating losses until at least 2012.” — then how can you make the claim that Pandora is “on the verge of profitability?”
It’s not even a case of dueling experts, as you yourself have acknowledged that you only do this on a part time basis.
So, what gives?
The company went from $15 million losses a year earlier to a few hundred thousand. That is how I can state that they are on the verge of profitability. Pandora’s Q2 and Q3 last year were profitable. I would bet that my analysis will be closer than that of Bloomberg. Unless the company goes on a massive spending spree, their model is producing great revenue. They just launched their biggest long term advertising deal yet, and those numbers are not in the latest data.
And companies who have pared losses year over year never reverse that trend? I think I’ll take Bloomberg’s statements, thanks, rather than your “bet.”
You certainly have that right
Thanks, I knew I had it right all along…you really have to watch those double meanings, you know.
And gee, Spencer, those idiots at Business Insider have this to say in a discussion of Pandora’s proposed IPO:
“Another risk: If too many people start using Pandora, high-speed Internet could become clogged.”
Hmmmmm, I wonder what the response would be to a clogged Internet. Gee, let me think…. More and lower data caps…nah, couldn’t happen. Only an idiot would think that.
Rick…..
Come now….The internet getting clogged……Please do not go down that path.
While bandwidth is not unlimited, the Internet seems to have kept up with an ever-growing demand. New compression, new algorithms, etc. are developed all of the time. Sirius XM has improved their compression technology no less than 3 times since inception. One distinct advantage of Sirius XM is that there is no limit to the number of users who can receive the service without degrading.
Have a great evening.
Why not go down that path? Greater minds than yours or mine have. Are you so smitten with human technology that you believe there are no limitations to what we can do? The law of unintended consequences has a lesson for you, I think.
And yes, your last sentence above is perhaps the most truthful thing I have seen here so far. Sirius has a potential market of hundreds of millions of people just on one continent, with no significant infrastructure costs involved in servicing that market. Along the way, Sirius is posing a threat to Pandora et al. right in their own backyard. Assuming that that backyard continues to exist (which I doubt), Sirius has the edge in flexibility alone.
And yes, I had a great evening. Thanks.
Spencer Osborne, for disclosure purpose, do you have any surreptitious link with Pandora Inc.?
I have no relationship at all to Pandora. If I did I would have disclosed it in my article.
I think that Spencer honestly believes what he says, just like many others who have honestly believed in something completely wrong. Time will tell.
I believe you sir, are an idiot and a wacko. Who in their right mind spends this much time arguing such a terrible point?
Who in their right mind would take the time comment on arguments about “terrible points?” What does that say about you?
For the life of me, I still can’t understand why the Wall Street Journal considers this article a “must read.” The article is full of vague generalities and unsubstantiated claims, demonstrates an enormous lack of creative thinking, offers nothing really new or unexpected in the way of the data that are provided, and lacks any sort of comprehensive analysis of the implications. As “smitty” said right at the top, “and?”
Clearly as well the author is not inclined to consider differing ideas and opinions, and offers nasty attacks on people and ideas that do not fit his particular paradigm.
Is this the best that journalism has to offer nowadays?
As I said months ago, I suppose I’m more disappointed with the WSJ than with Spencer or Sirius Buzz, but there is a considerable amount here to create disappointment as well.
You make this same comment on the WSJ blog post every week and yet here you are. For the life of me, I still can’t understand that. Don’t click the link Rick, its so simple a cave man could do it.
Yes, writings on cave walls are apparently about the extent of journalism nowadays, so your comment seems somewhat appropriate.
I remain the eternal optimist that some day, perhaps not in the near future, but some day the WSJ will link to some real journalism. And you with all your negative comments will never cure that optimism. Have a great day!