Free Pandora Now Means More Commercials

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As Much As 11 Per Hour – Subscription Plans To Be Pureplay’s Focus

Excerpts below originally published by Inside Radio, 2/13/17

Increased ad loads – as many as 11 units per hour – are part of a redesigned ad strategy at Pandora as the pureplay webcaster prepares to dive into the ultra-competitive on-demand music streaming business.

During the company’s fourth-quarter 2016 earnings call on Thursday, founder and CEO Timothy Westergren discussed its advertising strategy as it digs in deeper with its paid subscription services Pandora Plus and Pandora Premium.

The company added that it surpassed 4.3M paid subscribers, with Pandora Plus generating more than 375,000 net new subs by the end of December. However, Pandora’s market is quite saturated and subscription revenue represents a much smaller segment of Pandora’s total revenue, as compared to its advertising segment, so the subscription growth numbers are not too material.

For one, he said that the music streaming service had increased its spot load for users utilizing its free option… admitting there were instances where there were as many as 11 ads in a single hour during the past year.

At the same time, Pandora is reducing its sales force in first quarter 2017.

Pandora CFO Michael Herring added that the reduction in sales force relates to “a dramatic kind of drop in demand from a seasonality perspective” in Q1. “So if you’re going to kind of reset from an advertising footprint perspective, it’s the right quarter to do so—[especially to] the extent that the sales force that remains has a better chance of taking on the additional capacity.”

All of this relates to Pandora’s expected increase in revenue from its paid subscription plans. “If there is such a thing as kind of a pivot point for Pandora, this is what we’re doing right now,” Westergren said.

 In other Pandora news

Last month, Wall Street rumors flew and then cooled that Pandora was ripe for a buyout, with the most likely suitor SiriusXM.  Questions now abound as to who a suitor might be.