Ibrahim+Y.+Strategy+Report

Ibrahim Y. TO: Proximity Music Team FROM: Yimaj Ibrahim DATE: March 3, 2010 SUBJECT: Strategy Report

Here is my Pandora strategy analysis. Pandora dominates in the music streaming market with music recommendations, mobile phone access and advertisements. Gen-Y users have adopted this service and enjoy the online entertainment Pandora offers.


 * Profile**

Pandora, internet radio service, recommends music playlists based on listener's preferences. It was founded in 2000 as Pandora Media, Inc. by Will Glaser, Jon Kraft, and Tim Westergren (members of Music Genome Project). Joe Kennedy, CEO, helped the company grow as Pandora launched their software for mobile devices on July 11, 2008 (Wikipedia). The main office is located in Oakland, CA and the sales offices are located in Los Angeles, New York, and Chicago.

Pandora's revenues come from three sources:


 * //consumers// who sign up to be a member and pay a monthly subscription fee;
 * //mobile phone providers// who license Pandora Radio for cellular phones used by subscribers;
 * //advertisers// who expose their brand/company to consumers through Pandora's web and mobile services

Pandora Currently has 6.5 million internet users per month and 3 million mobile users per month, said by Pandora CEO, Joe Kennedy during an interview with Vator news. They have generated $50 million in revenue for 2009, up from $20 million in 2008. Pandora projects revenues to remain profitable for the 1st quarter of fiscal 2010.


 * Competitive Landscape**

The primary force driving competition in the music streaming marketplace is the online music search engine called Grooveshark. Although Pandora still offers saving a station, Grooveshark allows users to search any song and save playlists for future use.

Pandora also faces intense competition for the delivery of songs and concert updates from iLike. Pandora, Grooveshark, and iLike all possess their own unique features, but it is clear that majority of the users favor Pandora Radio.


 * Pandora's Strategy**

Pandora has chosen to target, small and medium-sized businesses with a new advertising strategy to reach consumers across multiple platforms" (Albarran, 2010). Pandora now is allowing companies to put their logos and names on Pandora's site as a border or along the tool bar. This move also allows Pandora to get exposure to consumers in sectors other than music. Pandora's strategic move is based on collaboration with AdReady. The purpose to this alliance is so Pandora can manage advertisements more efficiently (Albarran 2010).


 * Gen-Y Implications**

Pandora dominates its sector by providing music recommendations, mobile phone access, and advertisements. These three features make Pandora attractive to Gen-Y users. University of Phoenix Director of Academic Affairs Rodney Luster, Ph.D., discusses the use of Pandora by Gen-Y users and concludes that this generation enjoys anything that has to do with "discovery". With the combination of discovery and music, Pandora has successfully reached the Gen-Y demographic group. Luster says, "the idea of finding an unknown artist is exciting" (Glenn 2006).

I believe Pandora provides a great service, however, the limited access is an unattractive feature. When I say limited access, I mean Pandora limits the amount of songs you can skip per day. So if you don't like the songs recommended and continue to skip through, Pandora will stop playing for the rest of that day. Aside from that, Pandora uniquely is the only service that breaks down every component of songs and suggests another one with very similar characteristics.


 * References**

Albarran, Alan. "Pandora's New Revenue Strategy-Impact on Radio." Gerson Lehrman Group, 2 Feb. 2010. Web. 3 Mar. 2010. .

Francisco, Bambi. "VatorNews - Pandora Sees Revenue up 80% This Quarter." Vator.tv - Voice of the Entrepreneur. 26 May 2009. Web. 04 Mar. 2010. .

Goldman, David. "Pandora Rises out of the Streaming Music Rubble." CNN Money. 18 Feb. 2010. Web. 04 Mar. 2010. .
"Pandora Radio." Wikipedia. Web. 3 Mar. 2010. .