Pandora (P) to See Stiffer Competition Later in 2012
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Pandora (NYSE: P) shares are trading lower following reports a formidable competitor might become even more so following the launch of a new offering. If we could be more vague with this opening sentence, we would.
According to Bloomberg, London-based Spotify is aiming to launch a radio service in the U.S. aimed at challenging Pandora. Spotify's current model is like a CD collection, where users create their own playlists through individual songs. While Spotify currently offers a service similar to Pandora's Music Genome Project, the new Spotify product would likely be more of a live radio service.
The benefit for Spotify, which Pandora currently enjoys, is that royalties are lower and set by the U.S. Congress.
The move should help Spotify attract a larger user base for its free, ad-supported service. The hope is to convert users into subscribers over time. Recent data from the two companies showed Spotify with about 10 million registered users with 3 million paying subs, while Pandora reported about 150 million users and 49 million registered visitors. Whether those visitors were paying or not was unclear (though Pandora reported just a $2.5 million gain in subscription revs in 2011 compared with 2010). Of note, Pandora strictly operates in the U.S., while Spotify also operates overseas as well.
Spotify's services is expected to launch at the end of 2012.
Shares of Pandora are off about 1 percent.
According to Bloomberg, London-based Spotify is aiming to launch a radio service in the U.S. aimed at challenging Pandora. Spotify's current model is like a CD collection, where users create their own playlists through individual songs. While Spotify currently offers a service similar to Pandora's Music Genome Project, the new Spotify product would likely be more of a live radio service.
The benefit for Spotify, which Pandora currently enjoys, is that royalties are lower and set by the U.S. Congress.
The move should help Spotify attract a larger user base for its free, ad-supported service. The hope is to convert users into subscribers over time. Recent data from the two companies showed Spotify with about 10 million registered users with 3 million paying subs, while Pandora reported about 150 million users and 49 million registered visitors. Whether those visitors were paying or not was unclear (though Pandora reported just a $2.5 million gain in subscription revs in 2011 compared with 2010). Of note, Pandora strictly operates in the U.S., while Spotify also operates overseas as well.
Spotify's services is expected to launch at the end of 2012.
Shares of Pandora are off about 1 percent.
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