By BEN SISARIO Pandora Media, with more than 150 million users, is perhaps the biggest name in digital music, apart from Apple’s iTunes. The question, as a clutch of new competitors arrives, is whether it can hold on to that dominance.
The latest challengers to Pandora, a source of free, convenient Internet
radio, are the playlist app Songza and the digital music service called
Spotify, which recently made its radio feature available free on mobile
devices. Both companies have made splashy changes in the last couple of
weeks, bringing warnings from analysts about the possible effects these
updates will have on Pandora.
Songza, introduced last fall, is based on the principle that even using Pandora, which tailors song streams to a listener’s taste, requires too much thought. To use Pandora, a listener thinks of an artist or song and then gives feedback as the music plays. Songza has ready-made playlists for certain times of day or activities, such as getting going on Monday morning or romancing on Friday night.
“The idea here is that we can get you to awesome music without you
having to think,” said Elias Roman, 28, Songza’s chief executive.
When Songza introduced a new version of its mobile app this month, it
was downloaded 1.15 million times in 10 days, and shot to the top of
Apple’s App Store rankings, passing Pandora and iHeartRadio, a radio app
from Clear Channel Communications. Songza executives say the service’s
number of monthly active users is in the seven figures.
With stick-figure icons and a whimsical editorial approach, Songza has
created more than 100,000 playlists. The site’s three founders, who met
at Brown University and previously ran the music download service Amie
Street, explained in an interview at the company’s bare-bones
headquarters in Long Island City, Queens, that elaborate thinking
sometimes went into creating playlists for the dullest situations. For
example, “epic film soundtracks” is meant to help listeners slog their
way through a day at the office.
“If you’re at work, filling in cells in a spreadsheet, and you’re
listening to the soundtrack to ‘The Last of the Mohicans,’ suddenly that
changes everything,” said Peter Asbill, the chief operating officer,
who is also 28. “It feels awesome, fun and epic.”
Richard Greenfield, a media analyst at BTIG Research who has been
critical of Pandora, said that Songza and Spotify put pressure on
Pandora.
“It’s not that Pandora isn’t a good service; it is,” Mr. Greenfield
said. “The question is, now that there is more direct competition, what
happens to listener hours? Not to mention, some of these companies are
going to be competing for the same ad dollars as Pandora.”
Pandora went public a year ago at $16, but its shares have been below
that price since last July. On Wednesday it closed at $11.79, up 2.97
percent.
Tim Westergren, Pandora’s founder and chief strategy officer, said in an
interview this week that the competition had not affected the service’s
growth. In the last two years, its user base has tripled, and the
company’s revenue has also been growing rapidly, though it has never had
a profitable year.
“Our growth just keeps going unabated,” Mr. Westergren said. “Nothing
has impacted it: Spotify hasn’t; iHeartRadio hasn’t.”
Songza gets its music through the same compulsory license process as
Pandora, Sirius XM and other forms of Internet radio. But unlike most of
them, it carries no audio advertising. The company makes money from
display ads and from partnerships with other media companies. It is
available on a trial basis through Sonos, the wireless speaker system,
and will soon be on Roku devices. It will also soon release an app for
Android devices, the Songza executives said.
Mr. Roman declined to say whether the company was profitable over all,
but said that it was profitable on every user stream it served.
“Our whole premise is not that this is more gamified than Pandora, or
has more elite features,” Mr. Roman said. “It’s that this is simpler and
more directly related to the thing you want, which is music to make
whatever you’re doing better.”
Source: http://www.nytimes.com/2012/06/21/business/songza-and-spotify-challenge-pandora-for-ears-and-ads.html?_r=1&nl=technology&emc=edit_ct_20120621
Source: http://www.nytimes.com/2012/06/21/business/songza-and-spotify-challenge-pandora-for-ears-and-ads.html?_r=1&nl=technology&emc=edit_ct_20120621
