Alternative revenue ideas for Pandora
Posted by The Technocrat | Filed under Audio & Video, Web
As Mashable pointed out, I’ve expressed my disappointment in the idea of audio advertising on Pandora, along with a few others. To me, Pandora represents a very pure service, offered for free, that has become one of my favorites out of the hundreds of web services I use on a monthly basis.
In true conversational-web form (otherwise knows as Web 2.0), I wanted to not only express my concern but offer a few suggestions on alternate methods of monetization of the Pandora services in order to keep the audio stream ad-free (or, as I like to say, unpolluted). I think this is important, as it’s not all about firing off your gripes…
Tom Conrad, Pandora’s CTO, commented that “[user] responses are just the kind of thing we need to hear during this period; so thanks for posting about this”. Tom, I value Pandora’s service greatly and agree that Pandora deserves to turn a profit for its wonderful service. Here’s how I see this done without changing its product to something listeners might see as undesirable.
- Communicate with the community. On Pandora’s landing page, you say “We created Pandora so that we can have that same kind of conversation with you.” I understand this is relation to the music selection, but please be open to accepting comments back from the user base when implementing a change such as this. Explaining any new features and explicitly asking for feedback can go a long way in a product’s lifecycle. You may get positive or negative feedback, but in any case both you and your advertisers will immediately know the response to any new advertising tactic, instead of having to wait and see what the fallout is. By then, it will have already been too late.
- Go Mobile. By all indications, the mobile scene is gearing up to be very interesting in 2007. Carriers are starting to push WiMax to a degree they haven’t approached before, starting in December. Mobile devices are reaching new penetration and are consolidating services on a massive scale. We’re quickly approaching the tipping point where residential consumers are starting to abandon the thought of having just a mobile phone instead of a multimedia device. people want to be mobile, go for it! We’ve got two directions to go here, both of them profitable.
- License the Pandora service to any mobile device equipped with WiMax or WiFi. They’ll be glad to add value to their existing products and compensate Pandora for it. In the case of Palm/Treo/WinCE devices, it wouldn’t be difficult to get a mobile app out there, preferably factory installed and used as a selling point. You’ve got expanding WiFi service (even mobile!) on your side…not to mention expanding muni-WiFi coverage. (I’m seeing an ad campaign based on the STate of CA’s State Park beaches – they’ve got access)
- Work with a developer to get a Pandora-specific hardware device out there. The slingbox is great, but trends are going towards mobile on a much more massive scale than home theater. I’m imagining either a WiMax- of WiFi-enabled personal media player, much like the satellite radio companies have. Except you’d be looking at AM/FM(HDFM?)-mp3-Pandora functionality. The Pandora part of this will kill a battery, so that would have to be addressed, but if Apple can get away with the weight of a standard iPod, you’d be able to put quite a Li-Ion battery in there. Here’s the kicker – make it mountable on a standard dashboard-slot vehicle faceplate. Now, future vehicles with wireless access just became Pandora-equipped. Ask any commuter if they would prefer targeted commercial-free music during their commute.
This leads to other mounting fixtures (boombox, desktop cradle, etc.) that also lend themselves to profitability. - Leverage User Accounts for sales. You’ve got a record of people’s favorite artists and songs, use it! Possible uses might be “Your favorite artist xxxxx has released a new single on Amazon/iTunes. Purchase (for xx% off, courtesy of McDonald’s)?” or “We’ve noticed you have bookmarked 8 of 12 songs from a particular album, purchase the album (for xx% off, courtesy of McDonald’s)?” I know it seems obvious that someone might want to buy an album if they like 11 of 12 tracks (maybe they just haven’t heard the 12th, too), but this probably isn’t the case. I just can’t see people extracting these types of realizations from tracks added over a great amount of time.
That’s what I’ve been able to come up with in the last day or so. I encourage other bloggers to post their ideas and link here, or list them in the comments if they don’t have a place to write their thoughts.
Pandora has supplied us with a great service for free. Let’s repay the favor and help create a revenue stream for them. While I agree that ads are the easiest way for monetization, Pandora and similar services can earn a living without resorting to the tactics of the old media. After all, the tactics of the old media are the reason why we have the new media!
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January 11, 2007 at 11:27 pm
[...] Alternative revenue ideas for Pandora [...]
January 16, 2007 at 11:28 pm
These are all great suggestions. We’re always looking for feedback on all we do and have heard lots of great ideas from our listeners over the last year. One example is the “move this song to another station” feature we recently added. That came directly from listener suggestion emails. We add hundreds of songs each week based on listener requests as well. This time at bat we did a pretty bad job communicating about what we were up to with respect to audio ads. We’ve just put a post up on our blog that opens the conversation up to anyone that wants to comment. We should have done that from the start.
Your other ideas are excellent. We’d certainly love to see a Pandora go mobile and stimulating music purchases is a big win for both Pandora and the artists. Practically speaking there just not enough margin in CD/download sales to even begin to cover our licensing and bandwidth costs, but every little bit helps. If nothing else being proactive about sharing new music releases with a bands demonstrated fans feels like a win for everyone regardless of the financial rewards.
Thanks again for the part you’re playing in this conversation. it’s a big help.
Tom
CTO @ Pandora
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