Right now, most Pandora users are listening to music for free and turning the volume down during ads, with a handful of people paying for an ad-free version of the same service. Now comes a report that Pandora is looking to offer new options that would put the company in more direct competition with Apple, Google, Amazon, and Spotify.
Unlike the subscription services offered by those companies — where paying users get access to large libraries of music to listen to at will — Pandora has continued to provide a “radio” service, where it allows users to pick an artist or genre and then predicts what other songs you might like based on that preference.
The Wall Street Journal reports that Pandora could soon — possibly as early as next month — begin offering a new premium option that would give users more control over the music they hear.
The Journal’s sources say that the plan is to offer a $10/month subscription that is effectively identical to Apple Music, Google Play, or Spotify: Unlimited on-demand access to a library of millions of songs so long as you maintain your subscription. Amazon also bundles a similar Prime Music service into its Amazon Prime package.
Pandora’s biggest roadblock to the subscription concept, notes the report, is getting record companies to sign on. Under its current radio business model, Pandora doesn’t need record companies’ permission to play most music. As long as Pandora follows the rules — things like limiting the number of times a certain song, artist, or album can be played within a given time limit — it doesn’t have to negotiate individual licensing or royalty deals.
What complicates these negotiations, according to the Journal, is the fact that in addition to offering the new premium service, Pandora wants to expand its popular free tier internationally. Instead of the free-for-all Pandora has enjoyed thus far, some record companies want to limit which songs are played on this free tier.
It’s worth noting that Apple killed off its long-running iTunes Radio service in early 2016 as it put all of its eggs into the Apple Music subscription basket.
Pandora can’t just do that, as it has some 80 million users on that free tier. The ad revenue from those users brought in nearly half a billion dollars in the first six months of 2016 alone, around five times the revenue earned from subscribers who pay for the ad-free Pandora radio service.