Jones+Strategy+Report

Jones B

To: Proximity Music team From: Brian Jones Date : February 23, 2010 Subject: Pandora Strategy Report Analysis

** Pandora Profile ** Pandora Radio is an automated internet radio website created by the Music Genome Project (Pandora). Users input an artist or song and the application automatically selects other songs of the same genre and plays them in a continuously until disabled. Users provide feedback on whether they like or dislike a song that Pandora has selected for them and is then taken into consideration for later song selection. Pandora's media player is based on Openlaszlo, an open source / public platform for the development and delivery of internet applications (Wikipedia). Over the last 2 years Pandora has expanded from Personal computers to mobile devices. The mobile software is compatible with the iPhone, iPod touch and other Android phones. Pandora offers two subscription options, all users are eligible for 40 hours of free music, users who reach the 40 hour limit have the option of paying $0.99 for unlimited use for the rest of the month. Otherwise they must wait until the beginning of the next month for another free 40 hours. There is also a fee-based subscription that removes unwanted advertisements and increases your song selection. Pandora offers a wide variety of music genre's and it also gives you the option of buying songs or albums at online retailers.

Due to the popularity of digital media these days, Pandora has more than enough competition, a few of which would be Last.fm, LimeWire, Itunes and Spotify. Last.fm is another internet radio music site that provides basically the same services as Pandora. Users are able to create accounts / profiles and build customized radio stations and playlists from any of the audio tracks available in Last.fm's library. Along with other internet radio sites, Pandora must also compete with Bittorrents and other peer-to-peer file sharing applications. LimeWire, Spotify and PirateBay are three big competitors. Users are always looking for the most convenient and cheapest way to acquire what they need. When faced with the decision of paying a subscription to listen to internet radio or download the exact songs you want to listen to for free and have the ability to play them continuously, most would choose the latter.
 * Competitive Landscape**

A new long-term solution for music services such as Pandora includes the reduction of more than 40 percent in the royalties formerly paid by such music-streaming sites to the record industry. The previously high royalty rates had been widely blamed for the looming colapse of Web streaming services, many of which faced possible shutdown for the past two years (PC World). While listening, users are offered the ability to buy the songs or albums at various online retailers. Over 400 different music attributes are considered when selecting the next song (Wikipedia). By providing users with a sample of their product, (40 free hours) 99 cents does not seem like much of an expense to continue listening.
 * Pandora's Strategy**

As digital media continuous to revolutionize the way people acquire music, Pandora looks to profit from it as well. Gen Y is always looking for the next big thing, with so much publicity and legality surrounding illegal and pirated media, legally streamed music from internet radio sites may be exactly what Gen Y needs.
 * Gen Y Implications**


 * References**

http://en.wikipedia.org/wiki/Pandora_Radio

http://www.pcworld.com/article/168026/cheaper_music_royalties_pull_internet_radio_back_from_the_brink.html

http://en.wikipedia.org/wiki/Last.fm