Pandora's App Refresh Hints at the Company's Simple Strategy

Andrew Harrer/Bloomberg via Getty Images
The Pandora Media Inc. logo shown on an iPhone in 2013. 

On Tuesday (Dec. 2), Pandora announced the first major refresh for its mobile app in roughly two years. Given the tonnage of press-release artillery (PRtillery, if you will) flying around in mobile-music-streaming space lately, the release is notably modest.

The update refines the overall look and offers some useful new functionality -- swipe between the "Now Playing" and the "Stations List" windows, manage thumbs-ups and thumbs-down history to better tailor radio stations, easier access to artist information while you listen. It’s smoother and better looking -- a great new coat of paint -- but nothings has really changed.

Pandora is both an entrenched giant in the streaming music space and an appetizing minnow in the hungry eyes of whales like Apple, Google and Amazon, the pod of titans recently vying for real estate in Pandora’s reef (even if the tortuous metaphorical marine biology doesn’t quite work out). If Pandora is afraid of these swarming titans, its UI roll out doesn’t betray any sign of it. 

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The company does still occupy an enviable position vis-a-vis the mobile listening pie. Despite being available only in the US, Australia and New Zealand, Pandora is ostensibly the world’s largest mobile music-streaming service, by number of listeners. It is certainly the biggest internet radio service. The company has spent more than a decade carving out a niche for its streaming radio offering -- coming preloaded on all kinds of consumer hardware -- which accounts for roughly 9 percent of all US radio listening and nearly 2 percent of worldwide mobile advertising revenue. Its market cap stands at $4.04 billion, currently neck-and-neck with the valuation of privately-owned Spotify, arguably its foremost competitor. Pandora continues to lead Spotify in the number of active users, with 76 million compared to roughy 50 million for Spotify, though the gap is closing.

The battle for our earbuds and speaker systems is expanding on many fronts. Last week Google rolled out a beta version of a new offering called Youtube Music Key, a subscription-based mobile app that leverages Youtube’s vast and weird catalogue of musical fare. Music Key will be bundled with Google Play All Access subscriptions, and many took the announcement as the signal that Google is entering the space in earnest, throwing its weight around by knitting together the world’s most ubiquitous streaming library and a preloaded app on the world’s most-used mobile operating system.

The main gripe by beta users of Youtube Music Key? The user interface is kinky and there appears to be some faulty needle-work in that knitting, as users toggled between screens and services. Which gives the otherwise prosaic Pandora UI announcement shades of subtle tactical maneuvering.

Obviously, a full-scale UI rejiggering takes months to come together, so it’s not as if this release is a sudden and direct response to the Music Key release. But it is a sign of the company’s focus and strategy as the heavyweights go about making big splashes in its pond.  Pandora maintains that, as an internet radio platform, it offers totally different type of product from on-demand streaming services. But its actions suggest it sees the competitive field otherwise.

This view is supported by the details of the PR skirmish set off last month when Taylor Swift pulled her catalogue from Spotify, citing the company’s opaque and paltry compensation for artists. The kerfuffle brought a lot of attention to the issue of just exactly how music streaming affects the musicians whose work the various services distribute. As if sensing the coming battle, Pandora announced just a week earlier that it was making a wide array of audience data available to artists with the launch of its Artist Marketing Platform (AMP). The AMP shares data including the total number of plays and thumbs-up as well as geographic and demographic data about an artist’s listeners. Amid the rocket-glare and bomb-bursting over Swift and Spotify’s practice of sharing such data with labels rather than directly with artists, the message to musicians was clear: rest assured, Pandora was still there, and more fair.

By these lights, Pandora is patiently exploiting opportune moments to differentiate itself from its more moneyed competitors, as their vulnerabilities come to light. It’s classic asymmetric warfare, and it might indicate that, despite its significant market share, Pandora already sees itself as much as the scrappy underdog as the established power.

One of the crucial differences between Pandora and its competitors is the extent to which, as a continuous radio service, it rewards passivity. While its competitors engage in an arms race to develop the biggest music catalogue with the greatest mobile reach, Pandora is digging its trenches in the deep, rich dirt of user laziness. A bare minimum of button-pushing unleashes an endless stream of music without having to think or decide or make demands. Users can gradually personalize their stations to their tastes over weeks or months or years.This probably amounts to built-in revenue serendipity, since the lazier users are more likely to withstand being advertised at -- the majority of Pandora’s revenue comes from advertising, and unlike its competitors, which are pushing ad-free subscription services, it seems content to keep it that way.

Add in ready-made audiences such as buyers of a third of all new passenger vehicles in the US and all ten of the ten best-selling ones, and you’ve got a potent brew of passivity facilitation that no other music service can match.

Pandora’s UI update falls firmly within this pattern. It’s the first major refresh for the mobile app in a couple of years and even so it’s largely cosmetic, refining and extending the existing functionality without seeming to add anything at all. The company has recently created innovative products to serve its artists and advertisers, but it has taken a stingy approach to adding new features or altering its consumer product. After a over a decade in the business and all the listener feedback that comes with it, Pandora continues to bet on the existence of the Passive Majority.


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