Submitted by The Standard08.18.2008
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This prediction is closed and has been judged.
Judgment on Dec. 1, 2008: Pandora has managed to keep the lights on, in large part due to the Senate approval of HR7084, a.k.a. the Webcasting Bill. Thus, Pandora avoided moving to a subscription-based model to survive. Judged at 0%. -- The Industry Standard
Original prediction: Pandora, the popular personalized Internet radio application, has been viewed as an innovator in streaming audio for years. However, due to demands for high-priced royalties from SoundExchange, Pandora’s current business model is in serious jeopardy.
The demands against Pandora are apparently so high, either Congress will need to intervene or Pandora will need to change (or die).
One possibility for Pandora to stay in business is to become a subscription-based service. Charging a flat monthly fee, or even a usage fee, seems reasonable considering that the service is so well catered to one’s musical tastes – and it is currently commercial free. Moving to an advertising based model would certainly be viewed as certain death as well.
Will Pandora’s idealism, and SoundExchange’s greed, prevent the two parties from settling on a deal? We hope not. But there could be a way out.
This is a prediction that Pandora will avoid “pulling the plug” and convert to a subscription-based model.
This prediction will stay open through the end of November assuming Pandora stays in business that long. If Pandora is forced to close down, or attempts any other business strategy (e.g. new forms of advertising), this prediction will be judged unfavorably on or before the end of November, depending on how this story develops. It is possible that Pandora and SoundExchange will broker a deal for a much lower royalty charge, but that is not a consideration in this prediction (nor would it help Pandora to pay for said royalties).
Price History
Prediction Statistics
| Betting Closes: | Nov 28 2008 | Current Consensus: | 8.32% | Total Bets: | 55 |
| Today's Change: | 0% | ||||
| Life Time High: | 48.75% | ||||
| Life Time Low: | 6.01% |
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That was Pandora's original model and it didn't work out. Furthermore, most subscription-based models have yet to justify the business model (i.e. Rhapsody). Pandora's popularity is primarily due to its ad-based model. I won't be surprised if Pandora shuts down to preserve whatever VC $ that remains and sell off its assets.
You may be right, David, although as a user of the service that would be a complete and utter shame. It's essentially an XM Radio (that I can pipe through my iPhone in my car) and listen to commercial free - with my preferences playing the exact artists I want.
I love it.
Pandora is by far my favorite non-Apple iPhone app. If they had a per-usage subscription model, I'd be willing to pay a nominal fee (e.g. 7.5 cents an hour, etc.). Totally worth it, and it would be sustainable business-wise if 1 million Pandora users did this. That's a potential $75,000 per hour of programming.
What baffles me is why a radio station can pay so little, yet an online company must pay so much more. It doesn't make sense.
Hamburger coupons aren't going to keep Pandora open for business. Inserting ads between songs smacks of analog radio. The subscription model seems like a possible way out (look how well it works for MLB.com gameday radio).
Here's another one to look at , Mobestar :
http://mb.idate2008.com/mobestar-auditors-suggest-company-may-shut-down-...
On June 18, the company's own auditors had doubs about the companies ability to be a 'going concern.'
Check out their cash flows and stock chart at Business Week
http://investing.businessweek.com/businessweek/research/stocks/financial...
Talk about similar financial woes. We'll see more of this.
In my humble opinion; a subscription move will kill their market capture. Free user base = fuel for free market research +400 algorithms and counting… The smart play is to position as a world’s most sophisticated musical consultancy. Target audience should include best of breed record studios and producers. There just needs to be investment in sexy analytics to play ball. Revenue offering for growth will come from Ad Hoc customized sounds portfolios to high paying audiences (i.e. Warner, Sony, Universal, EMI). Keep the Independent labels for Pandora's own Record Label. I think they deserve it.
If someone thinks subscription in the best move, one must be sleeping with the lights on. Think how bored Executive Management will be with "subscription". "A quick hit theory" is not what brought these guys together...
"After that my guess is that you will never hear from him again. The greatest trick the devil ever pulled was convincing the world he did not exist. And like that... he is gone. " Kevin Spacey
You're spot on, Ryan. Problem is, they're running out of money, and really getting squeezed now by SoundExchange. When Tim Westergreen, Pandora's founder, tells WaPo that, ""We're approaching a pull-the-plug kind of decision," that doesn't sound like they have a lot of time to convince new VCs of the validity of their model and/or quickly sell their market research back-end data. It sounds like a last stand is imminent.
A leader needs to set-up. I agree Eric, Pandora is in a time of reckoning, however there is too much IP being generated here.
People need to get aggressive!
- Adhere to a Gartner Market Research model, target radio stations.
- Segment your user base. Free Consumer user base = maximum R&D. Charge the Commercial segment for back-end analytics (monthly subscriptions*) on their target audiences.
Sell Financiers!
This screams behavioral economics, where is Ken Fisher?
Steve Jobs, any interest the consumer music world....?
Right, but what makes a market a great market?
"The trick is, a market has to be nonexistent when you start. If the market is large early on, you will have too many competitors. You have to make it large.
How do you build a company to serve a market that doesn't exist?
Ha! We like the kind of entrepreneurs who can see the future. When that happens, you get this. [Leone whips out a dry erase marker and walks over to the whiteboard. He draws a dot, then a line that steadily moves up and to the right.] When the flywheel of a company that has created its own market gets going, it grows much faster than you expect. [He continues the line he has drawn in a sharp ascent.] Then it becomes an almost violent growth." Douglas M. Leone, Forbes
I believe there is a patient snake in the grass on this one. One must not forget consumers like things "cool" and the user-base are the key’s to the IP engine.
Did Apple just announce a "Music Genome-like" functionality at the Let's Rock event? If so, Pandora is not longer unique except for being "free".
:FYI Pandora: the British are ramping investment in 'genetic algorithm' research, hope that's a hint...
metadata layer should adhere, configure and track; calendar 365X24X7 24 hour user patterns. don't think you are currently doing this.
GO BLUE! Will be there for Homecoming!!!!
Could this legislation "save" Pandora and make this prediction null and void? Pandora could "cheat death" but not under the terms outlined above. They'd be thanking Congress, a rare occurrence indeed.
@Eric, why would it be null and void if "saved" by legislation? Since judgment criteria is not met, should it be rendered an unfavorable judgment? Just wondering as I do not have a position on this prediction.
Simply put, this is a prediction that is saying Pandora will become a subscription-based service. If this legislation passes (based on my limited understanding of it) I would assume the business would not be under extreme pressure to change their business model.
IMO, I understand this prediction to have 2 criteria that MUST be met
1) Pandora remains in business AND
2) Converts to a subscription model AND
3) Judgment date is end of November
Since the criteria for favorable judgment are not all met, it translates into an unfavorable judgment. Of course, TIS has the rights to override it by voiding it. Just my 2cents.
Right - exactly. I'm not suggesting it should be taken down. I'm suggesting that this now appears to be very likely judged at 0% if the legislation passes. That's my opinion, at least.
Aaah.... I misunderstood. Thought "null and void" means no winners no losers on active bets.
Latest ... House passed the bill. HR 7084 is now headed to the Senate for vote. Expectation is that it will pass as well and fairly soon too.
http://blog.pandora.com/pandora/archives/2008/09/congressional_u_1.html
This is a done deal. Even NAB (the only opposition) is now supporting the bill. There is really no reason for Senate to not pass the bill.
http://friendfeed.com/e/ba635011-00e1-a844-3a3b-404a4225e0b1/RT-somafm-N...
http://somafm.com/blogs/rusty/2008/09/nab-drops-opposition-to-hr-7084.ht...
http://www.consumeraffairs.com/news04/2008/09/internet_radio_reprieve.ht...
http://www.readwriteweb.com/archives/pandora_lives_a_little_longer_house...
Because this judgment outcome has since morphed, people opposed to this prediction should be recognized. Serious thought needs to be put into the fact Congress (not the consumer) has been the ones who "Subscribed" to Pandora. Hope this tells everyone something....
Through Congress's actions, you are witnessing the spirit of U.S. capitalism at work. More specifically the statutes of protection for a emerging U.S. market. Once this is completed Pardora will be more nimble to scale globally. Running free from it's coral, Pandora will 1st graze in the U.K. to learn more about the music preferences of our global listening community. Douglas Leone of Sequoia Capital, as I quoted above, will soon be using his dry erase marker, to discuss violent growth on his trusty White Board.
My objective for this article addressed "cheating death" and finding a work around besides having the end-user incur unneeded subscription fees.
After all -- this is what the masses wanted and they got it..
Truly done deal. Pandora will now survive to negotiate more favorable terms with SoundExchange via Digital Management Association given that House passed HR 7084 on September 28 and Senate passed HR 7084 on September 30.
http://blog.pandora.com/pandora/
http://technologyexpert.blogspot.com/2008/09/internet-radio-bill-passes-...
http://www.betanews.com/article/Pandora_sees_relief_ahead_in_net_radio_f...
http://www.iphonefootprint.com/2008/10/pandora-radio-and-other-webcaster...
http://www.gadgetorama.com/news/news_details.php?gorid=4143
Pandora laid off 20 employees (14%)
It's everywhere, David, and it's going to get worse before it gets better.
http://kara.allthingsd.com/20081017/what-yahoos-looming-costs-cuts-actua...
and
http://www.alleyinsider.com/2008/10/pandora-layoffs-cap-a-bloody-week
Today is December 1 and Pandora is still alive and kicking. Unfavorable judgment can now be made for this prediction.
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