With its pending IPO drawing lots of media attention, everyone is talking about Pandora. Not surprisingly, Wells Fargo Securities analyst Marci Ryvicker says the topic came up in her recent meetings with top executives of Entercom.
“While Pandora has threatened to go after local ad dollars – and specifically drive time ad dollars – management made a bunch of really good points that suggest Pandora is NOT the death of terrestrial radio,” Ryvicker reported in a note to clients.
“First of all, Pandora is a playlist that one OWNS and therefore is likely to compete more with your iPod than with terrestrial radio. Second, Pandora may have every intention to move into the dashboard but it is doing so slowly and the reason for this is the simple fact that it takes years – or rather decades – for an entire fleet of cars to turn over,” said Ryvicker of her discussions with Entercom CEO David Field and CFO Steve Fisher.
She then noted that Pandora “seems to be more bark than bite,” citing data from its IPO filing. The company reported that it had over 80 million registered users as of January 2011 and had streamed approximately 3.9 billion hours of radio listening in its fiscal year ended 1/31/11.
“Our thoughts – the average radio listener listens for 13 hours per week, which equals 673 hours per year. If Pandora’s listeners are equally engaged and listen for the same amount of time, their 3.9 billion hours would imply that they had just under six million listeners,” Ryvicker observed.
She also noted that Pandora’s IPO says it has no way of knowing whether people may have created multiple accounts and admitted that many registered users may not use the service actively.
“Our thoughts – Pandora has NO IDEA as to the unique number of ACTIVE users of its service, which is likely MUCH smaller than the 80 million listeners it touts to have today,” the analyst wrote.
RBR-TVBR observation: Numbers in the millions and billions look impressive. Kudos to Ryvicker for doing the math to discover whether they really amount to much.