As a nerdy high schooler, my appreciation for exploring new sounds couldn’t be satisfied by the radio. My friends and I were guilty of being those teenagers who used the likes of Napster, Kazaa, LimeWire and a bevy of file-sharing apps to swap MP3 and zip files of our favorite tracks and albums. We were, as the recording industry pointed out, stealing.
When the government clamped down, and record companies began suing kids my age for online piracy, our virtual way of sending what used to be a mixtape of assorted tracks faded away. How would we discover new music now, we wondered, absent our virtual ways of easily swapping our favorite tunes?
And then, lo and behold, Pandora arrived in 2005.
In those early days of online music, there weren’t many streaming options. Whereas iTunes and iPods seemed destined to reign supreme, the reality was that a bunch of cash-deficient high schoolers and college students wouldn’t be able to afford paying for an entire collection of music—especially not from artists they might be able to hear for free on the radio. So I made Pandora my go-to destination for expanding my musical tastes and became a loyal listener for upwards of six years. I even played it in the car instead of local radio stations.
But then came the likes of Spotify in 2011, which freed me to listen to and discover music with friends—unrestricted by Pandora’s structure and free to enjoy music on demand. As a broke college student, a monthly subscription was easy to rationalize: Give up two trips to Starbucks to get unlimited access to a nearly comprehensive music collection.
I broke up with Pandora, and never looked back. But somehow, 10 years later, the app has managed to stay alive. And on September 9, they’ll celebrate a decade in business by offering listeners an “ad free” day, a rare opportunity to experience the paid version of the platform. There’s just one problem: It’s too little, too late, especially for their once loyal subscribers.
As Fortune’s Erin Griffith notes, Pandora’s staying power can be easily attributed to its early start, relative to the field of competitors. “When Pandora launched in 2005, the world of streaming music was a very different place. For starters, there were no connected cars or smartphones connected or smart cone speakers,” Griffin writes, highlighting the increased presence of competitors may force a sea change soon, as a core business buttressed by advertising may not be enough anymore.
An early, home court advantage may not be enough in the coming years for Pandora, and a day of ad-free listening may not necessarily attract new subscribers, let alone encourage existing ones to remain loyal.
But even further, the app itself hasn’t evolved much to keep up with the pace of other offerings. That includes Spotify’s music on-demand feature, the iHeartRadio app allowing audiences to listen to stations from across the country, and the hybrid features being boasted in the early launch of Apple Music. Griffin continues, “Unlike its competitors, Pandora does not offer music on-demand, there’s no emphasis on human-curated playlists or on upgrading users to subscriptions. (It has a small subscription business, but advertising is the core focus.) Rather, Pandora has steadily grown revenue, forecasting a 25 percent increase this year.”
The increases in revenue persist, yet the company will reportedly give up $4 million in ad revenue on September 9 for its birthday promotion. In a company statement released Tuesday, founder Tim Westergren says it’s a day of celebrating years of connecting music fans to artists that matter to them: “From the first song Pandora played in 2005 to the 50 billionth thumb we celebrated earlier this year, our mission has remained the same–to provide each of our listeners with the best music experience possible, whether an old favorite or introducing them to a new artist and style of music.”
However, 2015 is very different from 2005, and other options for music lovers have become all the more attractive. With Spotify integrating to “socially share” music with friends through Facebook and Twitter, and the function of discovering new artists and genres is being delivered through Spotify’s platform—including pre-curated playlists and even radio stations for your favorite artists and songs. That essentially subsumes one of the most core functions of an app like Pandora, which boasts 80 million active listeners.
That said, Spotify came fairly late in the game, an overseas export from Sweden that arrived stateside in July 2011, roughly six years after Pandora got its start in the U.S. With the writing on the wall, an early, home court advantage may not be enough in the coming years for Pandora, and a day of ad-free listening may not necessarily attract new subscribers, let alone encourage existing ones to remain loyal.
What Pandora still boasts, however, is their Music Genome Project, where nearly 100 musicologists help sort tracks into an algorithm based on genre, melody, tempo, lyrical stylings, and instrumentation—among many other elements of music composition. In many ways, this unique element of music exploration appeals to deeply engaged enthusiasts (or, as some would call us, nerds and snobs) and has helped them beat or crowd out competitors such as Musicovery and Grooveshark, which shut down in April.
Writing about why Grooveshark ultimately did not succeed, the Verge’s Stephen Witt noted that the company bucked the downloading trend from the early 2000s, even launching a streaming platform well ahead of Spotify. However, their peer-to-peer streaming approach—one that wasn’t blessed by the industry, fought in court, and resulted in struggles to attract investments—ultimately did the company in. Even if they arguably had the right idea and had it before a major competitor in Spotify swooped to take advantage, the problem was in the approach.
But unlike Grooveshark, Pandora’s largely remained free of controversy with its artists in the same way that Taylor Swift has challenged Spotify for devaluing the craft by not giving musicians more of a share of streaming royalties. Aside from a threat to shutdown in 2008 over their own rate battle, as Griffin notes at Fortune, Pandora continues to work through the potential legal bounds that could doom the service. Yet with Spotify quickly amassing a worth of $8 billion, Pandora still steadily grows, but has yet to crack the $1 billion mark.
"How you don't have Pandora?" Cause I have Spotify.— Ricoh (@lordxofdogtown) September 3, 2015
In the meantime, the platform appears to be doubling-down on its ad-based model, as a way of keeping the listening free for users while paying all the necessary licensing fees. Among many moves, Forbes noted, Pandora acquired a terrestrial radio station to diversify content, expanded its display ad inventory across mobile devices—and, as the company announced, more uninterrupted hours with sponsored listening.
There may be hope for Pandora yet, even after more than a decade of volatile change in the online music streaming and downloading markets.
There may be hope for Pandora yet, even after more than a decade of volatile change in the online music streaming and downloading markets. But as the company’s 10th birthday looms, and the competition gets even more fierce, it’s going to take more than one ad-free day of listening to get old, departed subscribers excited and loyal once again. In reality, the market may be drying up for customers willing to pay monthly subscription fees a specialized, ad-free radio app, when other platforms have emerged with a bevy of options for listening experiences.
Without a significant, new innovation beyond the Music Genome Project, Pandora, like its predecessors, could soon go the way of the mammoth.
Derrick Clifton is the deputy opinion editor for the Daily Dot and a New York-based journalist and speaker, primarily covering issues of identity, culture, and social justice. Follow Derrick on Twitter: @DerrickClifton.
Illustration by Max Fleishman