Padora iPad App is Ready to go (Even Though the iPad isn’t)
Apple opened up it’s doors today with the first round of approved iPad applications (even though the iPad does not go on sale until Saturday) and as expected one of the most popular iPhone applications of all time is front and center.
Pandora and it’s 50 million registered listeners will now enjoy a new universal version of the application for both the iPhone and iPad. The latest version features a completely redesigned interface to take advantage of the larger iPad screen, new album artwork, and improved performance.
Although I do think getting your product into as many applications and in front of as many as possible is the solid strategy, I still do wonder if the iPad/iPhone are the best devices for music applications. The single application limit does not seem to lend itself well to people like me who like the background of music while they go about working on other tasks. That said, I am sure after all the complaining that multi application capability is right around the corner.
[via TechCrunch]
“Pandora and it’s 50 million registered listeners will now enjoy a new universal version of the application for both the iPhone and iPad.”
How do they monetize? What are their revenue numbers?
They make their money primarily through various advertising methods (some of which are pretty interesting). Their top line revenue for 2009 was 50 million. They have about 100 employees and more than half are working in ad sales.
If the music is advertiser supported, how is that direct competition to Sirius? Seems to be heading towards a terrestrial business model then doesn’t it? Add the unbelievably high royalty rates and it’s tough for me to envision a sustainable ad supported business model on cell phone radio.
Registered user growth doesn’t mean EBITDA growth to me. What are the EBITDA growth rates?
They are in competition with Sirius XM because like Sirius XM, Pandora delivers audio to your home, computer, and mobile devices.
but not your car…unless you have an iphone
and they dont have talk shows or sports.
Is this a business model?
“Under the royalty rate structure that SoundExchange established with Internet radio providers last year, online radio giant Pandora now accounts for roughly 44 to 45 percent of total SoundExchange royalties for non-interactive streams. In fact, Pandora brought in $50 million in top-line revenues in 2009, but royalty obligations to SoundExchange alone (a cost that does not include publishing) topped $28 million.”
http://www.fmqb.com/article.as.....id=1738863
No, that is a quote from a FMQB article about what they pay in royalties, not a business model. Although, the fact that they account for 45% of incoming royalties is quite impressive given the number of online streaming music companies. Also, if I recall correctly, their royalty rate for 2010 and beyond is going to be significantly lower now.
Why are you concerned with their revenue? Its not like you are a stockholder of Pandora. They are profitable so, the fact that they are still streaming and first into every single mobile application is all Sirius XM should be concerned with. Do they make far less revenue? Yes. Do they have far fewer employees to pay? Yes. Do they have far less expenses when it come to hardware maintenance? Yes. It’s all relative.
I’m concerned if they are in business competition with Sirius. I don’t believe they are
1. They derive their revenue from ads. Sirius derives it from sub fees.
2. Their royalty rates are insanely high. Over half their revenue intake from last year. Sirius passes along royalty fees to consumers.
3. They derive $1.20 in revenue per listener per year and Sirius derives $70 in revenue per listener per year. If Sirius were to follow the Pandora business route on cell phones they will have more listeners and less cash flow growth. That’s not good business at all. In fact its a recipe for business disaster. Mel has to monetize it.
4. Being first to a mobile platform means nothing in the media business if your content is not up to par. Sirius needs to concentrate on content on cell phones not being first. Without good content people will not pay whether you are first second or last to the platform.
I could go on, but I will leave it at that for now. Remember this Sirius is a media business, its not tech venture capital. Totally different ballgame.
“I’m concerned if they are in business competition with Sirius. I don’t believe they are”
Fair enough, we’re going to have to agree to disagree on this point. As far as points 1-3, I dont think they mean a thing. If Pandora can make $100 per year after expenses and keep their company rolling, you are talking about 100+ million listeners in 3 years and that’s 100+ million listeners that will cost Sirius XM more to acquire. As far as point 4 goes… being first to any market it important in all aspects of business. We will have to agree to disagree on this point as well.
“Remember this Sirius is a media business, its not tech venture capital. Totally different ballgame.”
Except where they both have mobile apps, internet apps, and soon to be in car hardware which both deliver music content to listeners ears. Other then that… yup, totally different. I never argue that business-wise they are the same, all I am saying is they offer similar things to listeners. So similar that Pandora has poached George Lynch to help grow its in-vehicle internet radio initiative.
I am not looking to have a debate on this, I am simply putting the information out there for people to decide what it means and how important it is. We clearly have two different points of view on this (I do appreciate your point) and that hasn’t changed over the years, I don’t expect us to hash it out in the comment section of a blog post.
I will keep it brief and to the point Charles – First to internet portals and search – Prodigy, AOL, Excite, Lycos, AltaVista.
Need I say more
I said being first to market is important in business. It’s not really arguable, its common knowledge. I am not saying that you only have to be first… you still have to execute. If you can execute, it takes money or a superior product to play catch up.
Interesting you mention AOL and Prodigy who use to be internet service provider giants, I wonder if they considered cable (a different medium) stealing all their customers away?
First to market in an open field with no barrier to entry, as internet radio is, means absolutely nothing. Internet radio hasn’t found a business model in 15 years of existence.
Pandora is a fad with no unique content, much like MySpace was a few years ago. It will be a piece of cake for Sirius to conquer cellphones. It’s just a matter of time.
As content rules in radio how will Pandora ever compete in content with their insignificant cash flow? It can’t.
Sirius must get Howard on the app on the next contract. I would be startled if that didn’t happen. Then the game changes.
You sure do state a lot of your opinions like they are fact.
Seemingly Pandora has found a business model since they went from barely surviving to cash flow positive. I think the model is like any other ad supported with premium upgrade internet service. Myspace (the website) was a fad but the model is still alive and thriving over at Facebook. Myspace was simply beat out in this space, the space itself is still growing.
Content does rule and for some, music content is all that matters. In that regard, Pandora is beating Sirius XM in my opinion. The ability to customize and the superior sound quality blows Sirius XM’s music away. That said, the edge they do have is their exclusive content and that has not been all that impressive over the last couple of years. They are spending money on nobodys and not paying their top personalities that are actually drawing listeners… not to mention not locking up MLB. When it comes to content (eg their “edge”) I would give them a C+ at best in 2009. That’s one 30 yr old mans opinion… maybe other demographics find it to be an A+.
MySpace social networking model has been around predating MySpace and continues with Facebook then Twitter and there will be countless to follow. No barrier to entry.
Internet radio has been around since 1994. No business model yet. Literally over 1 million internet radio stations. The fad that is Pandora really began with the limited number of apps available on the iPhone a couple of years ago. That limitation is ending quickly. Projections are for more than 300,000 apps available by the end of 2010. No doubt it will go into millions shortly thereafter. Another “business” with no barrier to entry.
Just like all media, content eventually wins. Pandora certainly won’t be the last fad in internet/cellphone radio. It will be followed by countless others.
Once they get Howard on the Sirius app I am very confident that the ARPU will be driven higher. The cellphone app is really a very good add-on to a OEM car sub. I think that business model works.
When are you going to get Spencer back on the radio show. Honestly how much of Brandon can a person take??? Get Spencer going again!
Personally, I do not see Pandora as a threat to Sirius at all. HOWEVER, I am shocked and disappointed that Sirius did not have an app for the iPad ready to go as well to ride the wave of initial hysteria and hype surrounding it. Lets face it, native apps for it are going to be slowly trickling in, and those that are first to the gate are SURE to be downloaded by the throngs of new iPAD owners.
I think Sirius missed a great opportunity to be take advantage of this. Just for the exposure.
If they wait until next year to release an app of the iPAD, I am sure it will be downloaded, but by then, they’ll have A LOT more apps to compete for peoples attention available for the device.
Oh well.
I am not shocked but other then that, I could not agree with you more. The exposure and free advertising from those talking about it would have been worth the costs alone.
they are no threat to siri. content is king.