Music streaming site Pandora Media is all about customer engagement and providing a personalized customer experience.
Mike Herring, the CFO of Pandora, talked about the brand appeal and customer loyalty engendered during last month’s Wedbush 2015 California Dreamin’ Technology, Consumer Management Access Conference.
“It’s personalized radio,” he explained, according to Seeking Alpha. “It’s personalized for every specific user and it’s been largely ad supported. We have about 3.9 million, 4 million subscribers. The main benefit today of subscription is you don’t have advertising. Those subscribers pay $4.99 a month essentially. Otherwise, it’s free to the consumer and supported through advertising. We built a pretty effective sales force. We will do over $1 billion in revenue this year. We’ve come a long way. And that is all built around this core idea around music discovery and replay.”
Herring described what makes the Pandora music experience unique.
“So what’s different about Pandora in the music sort of streaming space is that that’s what we focus on first,” he explained. “Everyone else either has a different motivation. They are selling a handset or they have an ecommerce business or they are an operating system or something. Pandora is about the music service first and playing the right song for users on an ongoing basis and that’s, I think, been why we’ve been successful. People listen to Pandora because it provides the right music listening experience. We are not trying to create a funnel to drive other sort of activity. And that might sound like it’s not a big deal, but at the core of it, that’s what makes us better. That’s what’s makes the service better. As we add additional businesses onto Pandora, that’s a huge competitive advantage.”
Pandora is about music discovery, Herring noted.
“I think that our approach, strategically, is all about giving more to the listener and building businesses upon – on top of those activities,” he explained. “So that approach is a lot better financially too. The big issue around streaming business today is customer acquisition costs, right. Apple has a unique advantage of being on hundreds of millions of phones and having 800 million credit cards or whatever they do and stuff. But if they didn’t have that, they would have to – and they spend a lot of their real estate on this phone trying to drive people to music. You can’t even get it off – it’s like a permanent thing on there and still no one subscribes. You have to have a great product. And when you focus on that, then I think you have much better long-term prognosis to your business.”