Pandora Pushes For Subscribers With Pandora Premium

In a bid to push its subscription busines, Pandora finally launched its Pandora Premium service, which is essentially a $10 per month on-demand music subscription service, similar to what Spotfiy provides. The Internet radio company acquired Rdio last year with the idea of using its resources to create a Spotify-like platform, in the wake of its piling losses. It was imperrative for Pandora to come up with stratergies that could propel its subscription business growth, since it wasn’t generating enough revenues from ad-based service. The new Pandora Premium service gives users access to a music library of millions of songs, an on-demand feature and the ability to save music offline. With the launch of Pandora Premium and the earlier Pandora Plus, the company aims to increase its subscriber base to 11 million by 2020, up from its current base of around 4 million. The plan doesn’t appear wishful thinking on Pandora’s part, considering that this is a major step by the company towards creating a sustainable business model.

Pandora has been striving hard over the last couple of years to ensure that its business is not just an Internet radio service. Last year’s acquisition of Ticketfly that added a new business segment, and the acquisition of of Rdio for its intellectual property have each been prominent steps on Pandora’s part, though it is often argued that the company had overpaid. Pandora hasn’t been able to justify the expensive Ticketlfly acquisition ($450 millon) so far, as the revenues generated by the segment have been nominal. Nevertheless, it remains a move in the right direction and the company can leverage its reach and brand image in the U.S. to turn this small business into a significant revenue contributor over the long run.

The benefits of Rdio’s acquisition had been unclear so far, but with the launch of Pandora Premium, they might materialize in the near future. However, to make this work, the company will have to bolster its music library, which will require significant investments in content. The streaming music indusrty is competitive and relentless. And despite the availability of on-demand feature and offline music, Pandora still needs an extensive music library to stand in the league of Spotify and Apple Music.

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