1 Thing to Watch When Pandora Reports

By Rick Munarriz – May 21, 2013 at 7:30PM

NYSE: P

Pandora Media, Inc.

There's one metric that matters more than you may think at the leading music-streaming website.

Pandora (P) reports on Thursday, and financial journalists will talk up the growth. Big deal. We know Pandora reports monthly audience metrics. Folks will also talk up the likely red ink. We know that, too.

However, the one area where Pandora can really blow investors away is by proving that more than 1% of its users are actually paying to use the site.

In this video, longtime Fool contributor explains why having just 12% of revenue coming from subscriptions is a problem for a music website. No other major player sees it that way.

Spotify has millions of paying subscribers.
Even Sirius XM Radio (SIRI 0.98%) receiver-based subscribers have to pay an additional $3.50 a month for streaming content online.
Now Google (GOOGL -1.23%) has its All Access music subscription service that was announced last week.

For Pandora to have 70 million active monthly listeners is great, but having 69 million of them tuning in for free is not.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.