Pandora Internet Radio is a part of the Music Genome Project and is as much a marketing service as it is a radio service. Users enter a genre of songs or an artist and the service allows the listener their pleasure. The Music Genome Project powers the personalization and this sets Pandora apart from the AM/FM channels for the listener. Pandora effectively acts as a perpetual dee jay playing all the tunes that the listener wants to hear. As the mood of the listener changes, they can change the selections that they are listening to.
Hoovers lists Pandora in the Media Industry category under the music subset. So according to Hoovers, Pandora's primary industry is Internet music and downloads . Pandora's service is free to users and has more than 175 million registered users. Pandora is supported by local and national advertising. Advertising revenue is about $732 million which is sizable proof that radio can build strong advertising base. The ad free subscription rate is about 5.5% of the Pandora users. This concludes that advertising is the main business of Pandora.
Customers
Pandora has segmented their 75 million plus listeners into four market areas: geographic, demographic, psychographic, and behavioral. This not a perfect estimate at the types of people listening to Pandora but for lack of a detailed survey instrument it creates a working marketing segmentation for advertisers. This is done by the playlist selections that the listener chooses. If the listener looks for Bon Jovi over Crosby Stills & Nash , they receive one set of advertising. If the listeners choose opera over rock and roll they receive a certain set of advertisers. People are probably not aware of the marketing process of Pandora because it is subtle while incorporating your playlist. Pandora can provide a map of where the listeners are from to target the geography to advertisers.
Innovations
Pandora in 2011 was called one of the most innovative companies even before it filed an IPO. Today they are looking to change the in car advertising market with a selectable playlist for the vehicles. The use of the thumbs up or thumbs down icon gives the listener a chance to tell the artist is they like or dislike their song, thereby providing invaluable marketing data. The in-car advertising delivers a targeted 15 and 30 second audio spots to 130 car models and 270 aftermarket devices .
Five Forces
The Five Forces of Michael Porter applies itself well to the business model of Pandora. Competitors to Pandora provide a very active threat such as Spotify and iTunes, Google Play and a countless number of other online streaming music sources. The barriers to enter the industry are strong, as it is difficult to obtain a license and to broadcast in the light of the FCC regulations. As of Dec 2014 there are no more applications for licenses that are being processed.
Suppliers in the Pandora spirit are the artist. The suppliers contain a high degree of control over the offerings of Pandora. The price of the rights to the music is a charge that has few alternatives to negotiate for a lower price. The Power of Buyers is high as Pandora survives by the advertising and marketing dollars. The location and other demographic factors obtained by Pandora are used to target the ads to the buyers and as the number of potential buyers increases so does the power of the listeners.
Conclusion
Pandora is a leader in the Internet radio industry and is highly regarded due to its music genome project that provides a specially designed playlist for the listeners free of charge. Listeners are targeted by advertisement for products as a payment for their free service. With 75 million subscribers, Pandora contains a large market share of listeners to internet radio.
References
Hoovers. "Pandora Internet Radio." 2016. [online] http://www.hoovers.com/company-information/cs/company-profile.Pandora_Media_Inc.2b1700451b5b52de.html. Accessed FEb 2016.
Marketing, Kris. "4 Types of Market Segmentation." 2014. Marketing Flexibility. [onl;ine] http://marketingflexibility.com/4-types-of-market-segmentation/. 28 Feb 2016.
Truong, Alice. "Music Streaming." Fast company 6 Janu 2014. [online] http://www.fastcompany.com/3024416/fast-feed/pandora-unveils-targeted-in-car-ads. Accesssed FEb 2016.
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