Google Is No Pandora Killer

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Shares of Pandora (NYSE: P  ) closed slightly lower on an otherwise upbeat trading day yesterday, and it's easy to see why.

Google (NASDAQ: GOOGL  ) finally introduced a new music streaming service, and Pandora -- for now -- watches over the country's most popular music streaming service.

Google All Access offers a bit of everything. It's a provider of personalized radio, just like Pandora and Sirius XM's (NASDAQ: SIRI  ) recently introduced MySXM. It's an on demand and playlist platform, just like Spotify.

Google is big. Google is smart. Google is rich. If streaming tunes is Big G's next hobby, how can Pandora survive?

Well, the most important thing working in Pandora's favor is price.

Google is really gunning for Spotify, with its identical $9.99 a month cover charge. Those signing up to Google Access between now and the end of June can lock in a $7.99 monthly rate.

Pandora is mostly consumed as a free application. Just 12% of Pandora's revenue is derived from subscriptions, and that translates into roughly 1% of Pandora's 70.1 million active monthly users. If that 99% majority was interested in paying up for a better streaming experience, don't you think that they would have already shelled out money to Pandora for ad-free music?

For once, Pandora's growing army of earbud-donning freeloaders is a good thing.

History has proven that there are two different types of music listeners. Would Sirius XM have grown to nearly 25 million premium subscribers if Pandora was enough? Would Pandora have seen its audience grow 35% since Spotify's arrival last year if money wasn't an issue? Google, Sirius XM, and Spotify have all thrived in this climate.

If anyone takes a hit here it would Spotify, with the similar model.

Pandora's fine -- for now.

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  • Report this Comment On May 17, 2013, at 11:33 AM, prginww wrote:

    "Pandora's fine -- for now"...The real significant new competitor to be launched by GOOG will come in the second half of 2013, YouTube Music. The All Access paid service launch helped to appease music companies, which are very uneasy about all the free music content consumption on YouTube and very much wanted GOOG to launch subscription; this was a condition of supporting the forthcoming roll-out of YouTube Music.

    Why will the YT Music service be such a big deal for P and others? It will be free to consumer and target mobile. It will offer relatively unlimited, on-demand streaming with playlisting and sharing functionality. It will leverage a service and brand that is the most popular means of music consumption among the youth demographic ( With one billion monthly uniques, YouTube's direct focus on music will have major implications for competitors, especially P and Spotify:

    "While a Google Play music product could be big, the one music industry execs are most excited by is the one tied to YouTube. The new YouTube product would be designed for the desktop and mobile devices, according to a person familiar with the negotiations between Google and the major labels. Such a mobile offering, coupled with the powerful YouTube brand, could ignite the emerging streaming-music business, now led by Spotify for on-demand music and Pandora for Internet radio. If YouTube gets the rights to offer a powerful free streaming service on smartphones, it could be a game changer for music streaming."

  • Report this Comment On May 23, 2013, at 12:36 PM, prginww wrote:

    Pandora's "army of earbud-donning freeloaders" will be on the march -- away from Pandora.

    I recently used my Pandora account for the first time in 6 months. Their format is based "Radio stations" that the subscriber sets up based on favorite bands, by name. Pandora stream to you the most popular songs of that band, along with suggested songs from similar bands based on trends of other users.

    Well, I found that my favorite "stations" now play an alarming number of songs from bands very dissimilar to those on which I based the stations, presumably to invoke a Premium upgrade.

    Wrong move. After one session I'm done with 'em -- there's too much other stuff for a freeloader to play with.

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