Pandora has tip-toed into the tiered subscription digital music streaming business by rebranding its “Pandora One” ad-free streaming service.
“Pandora Plus,” described as a “one-of-a-kind, ad-free radio experience with dramatically increased functionality,” was uncorked by Oakland, Calif.-based Pandora this morning.
With a $4.99 monthly price point, this Pandora option allows for more skips, replays and capabilities for listening when not connected to the internet — just like Pandora One does.
It is not the on-demand, select-a-song personal playlist option that would bring Pandora closer to rival Spotify. That is still on the way, and is expected by year’s end.
RBR + TVBR OBSERVATION (full text below, for subscribers): With all of the buzz about a new fully interactive on-demand option, we were really hoping for a big announcement from Pandora. Instead, the world was treated to a technical tweak to an existing service disguised as a rebranding. With the Warner deal coming late yesterday, is the long-awaited news on on-demand tiers now imminent?
In an early-morning release distributed Sept. 15, Pandora chief product officer Chris Phillips said, “We’re always delighting our listeners through continuous innovation and a relentless focus on simplicity and ease of use.”
What’s new is a “predictive offline mode,” which automatically detects when one loses signal “and switches to one of your top stations that Pandora knows you love.”
As Pandora One, the company could only promise fewer time-outs.
Pandora also notes that new features will enhance its existing ad-supported option, with increased control over song skips and song replay; these features are provided so long as users of the ad-supported option are willing to view a video advertisement.
“We’re methodically and passionately developing the world’s most personal music experience,” Pandora founder and CEO Tim Westergren. “That includes flexibility in how you listen and what you pay for it. Whether a listener wants to take advantage of our enhanced ad-supported experience, our groundbreaking subscription radio service, or our fully interactive on-demand option coming later this year, we have a solution tailored for you at a price point you can afford.”
Indeed, “Pandora Plus” is the first step in what Pandora hopes will make it more appealing — and competitive — to users of such a service as Spotify, which allows users to create personalized playlists that offer on-demand play via a laptop and random play on a smartphone if they are non-paying subscribers; advertisements are heard on both the laptop and smartphone on free Spotify playlists and streams.
While “Pandora Plus,” as well as the new features available on the ad-supported tier, launches today, it’s not in the App Store on iOs devices. Pandora says it will roll out “Pandora Plus” to listeners in the coming months on both iOS and Android smartphones.
Existing Pandora One users will seamlessly transition to the new Pandora Plus service during that period.
RBR + TVBR OBSERVATION: There’s nothing better than waking up, seeing a press release from Pandora roll in around 5:15am Pacific, and then being deflated because it’s much ado about nothing. OK, we’ll be fair — there is a technical tweak here in Pandora’s rebranding of Pandora One to Pandora Plus. However, with all of the buzz about a new fully interactive on-demand option, Tim Westergren’s media blitz — including an appearance on CNBC Sept. 14 — seemed ingeniously designed to spur investors to buy shares of “P” before they turn to poo. With the news of a Warner Music Group licensing deal approval coming late yesterday, is the long-awaited news on on-demand Pandora tiers now imminent? If not, will investors be patient enough to wait until the end of 2016 for the new fully interactive on-demand option?
Westergren is steering a Zeppelin right now. With competitors Spotify at 40 million paid subscribers and 17 million paid subscribers using Apple Music, the music licensing deals announced Sept. 12 and yesterday are certainly essential for Pandora to finally jump into the paid subscriber arena. But, there are the licensing costs. If music licensing costs exceed revenue, or represent the majority of expenses, how is the business model sustainable in the long-term?
SunTrust Robinson Humphrey Robert Peck says it is, with his analyst rating on Pandora moving up from a “neutral” rating to “buy” thanks to the direct deals with music labels, the pending new tiered products, and the ability to beat low guidance given in July, when it lowered its full-year revenue outlook to $1.41 billion from $1.43 billion.
We look forward to Pandora’s new services, and to their competitive battles with not only Apple Music and Spotify but also with iHeart, and every radio station on the NextRadio app. Until then, Westergren is clearly the best poker player at the table right now, banking on a Royal Flush when he’s really got a pair of Aces.