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Pandora planning to overhaul existing premium offer before launching fully on-demand service

By | Published on Tuesday 13 September 2016


Pandora is planning to unveil a revamped version of its existing premium service before jumping full-on into the glorious and entirely loss-making world of on-demand streams, according to sources who spoke to the New York Times last week.

As much previously reported, Pandora – which currently operates a personalised radio service in the US, Australia and New Zealand – is planning to launch a fully on-demand streaming platform later this year, putting it into direct competition with Spotify and Apple Music for the first time. The on-demand service will likely cost the standard $10 a month, and is primarily being launched in order to provide Pandora with a new subscription income stream, it currently generating most of its revenues from ad sales.

Though Pandora already offers a premium version of its personalised radio service at $5 a month, even though the vast majority of its users are on the ad-funded free level. The Pandora One package currently removes the advertising and allows users to skip more tracks and, according to the Times’ sources, additional functionality will be added this month in a bid to sign up more paying users. That will likely include the facility to store some personal playlists that users can return to as and when they wish.

It’s an interesting development. Subscriptions rather than advertising are driving the streaming music boom, with most – though not all – streaming companies now seeing premium as their core future business, and the record companies and music publishers generally more enthusiastic about the paid-for platforms that generally generate much higher royalties for rights owners, artists and songwriters.

Though most paid-for services offer pretty much the same catalogue for pretty much the same price point, ie $10 a month. And while Spotify and Apple Music in particular are still adding new paying subscribers at a rapid rate, many reckon that $120 a year is simply too high a price for many consumers and therefore a mid-price paid-for streaming service is needed. The question is, what does the mid-price service look like, so that it’s better than the free platforms but not as good as the $10 a month services?

One proposal has been some kind of enhanced personalised radio service, with some people also arguing that more mainstream consumers are actually more attracted to a platform that picks the music for them based on their favourite artists, rather than requiring users to navigate a 40 million track catalogue themselves. Though sign-ups for Pandora’s existing premium personalised radio package have been somewhat lacklustre, and the now defunct Rdio’s dabblings with a similar mid-price offer didn’t come to much.

But perhaps those services were just ahead of their time, and there is still a market for a more sophisticated personalised radio service for a few dollars a month. Therefore it will be interesting to see how Pandora revitalises and markets its existing paid-for package, what the up-take of it might be, and how the US firm will then present its menu of free, mid-price and premium offers once the fully on-demand element comes online later this year.

As previously reported, Amazon – which is also plotting a standalone streaming music platform – is also expected to launch a $5 a month option, though it will likely be fully on-demand, but locked to the firm’s proprietary Echo speaker system.