The Coming Battle – PANDORA VS. SPOTIFY

January 19, 2011

News that Spotify is about to launch in the U.S. has caused me to examine how this new entrant will impact Internet radio.  There are significant differences in the Pandora and Spotify offering.  Pandora has a giant head start having over 80 million registered users and an average audience of 451,024 AAS Monday-Sunday 6 AM – Midnight (according to Ando Media’s November Webcast Metrics).  If you ask most people whether they would like to choose the music they listen to or have someone play songs based on attributes of music, the overwhelming majority will choose the former.  Whether they actually engage in the behavior of creating a playlist or do not have the time wanting to be more passive and have songs chosen for them remains to be seen.  While I believe both Spotify and Pandora can coexist, Spotify is going to substantially curtail Pandora’s growth.  Pandora touts personalization but Spotify is the ultimate in personalization.  One can argue that Pandora may be better for music discovery but Spotify has a built-in social aspect which allows music to be easily shared among friends.  A Pandora IPO should happen soon or they risk having those upward to the right audience growth charts flatten out..

Where does this leave terrestrial radio.  Unfortunately for those stations in the music arena far behind.  I am still hoping that the terrestrial stations streaming on line will adopt a different approach but the high degree of fragmentation makes this difficult except for perhaps CBS and Clear Channel.  Clear Channel has been quite active promoting iHeart Radio.  Aggregating all of their stations however is not enough to compete with Pandora and Spotify longer term due to their relatively low level of personalization.

Let the games begin….

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