Pandora is the face of Internet radio. By every measure it has achieved far more than any other Internet audio service. The company has over 65 million registered users, generates one-quarter billion listening sessions every week, and even generates a modest profit.
For most consumers, Pandora defines the entire category of Internet radio. There’s Pandora and the rest. You can listen to Pandora on your computer, your iPhone, Android, Blackberry, Tivo, and soon probably most Internet connected toasters.
Tim Westergren is an icon in Internet media circles. As the creator and face of Pandora he has scored interviews in mainstream media including the New York Times and Wall Street Journal.
And none of this will ultimately matter.
Pandora may have a tremendous lead over its competition, but it remains to be seen whether the service can sustain its lead. As countless Internet companies have discovered, there is no “first-mover” advantage when it comes to new-media.
Nothing that Pandora does is proprietary. Every aspect of Pandora can be replicated, and ultimately improved upon.
We are in the first inning of Internet radio. This is why Harker Research suggested that it was better for broadcasters to watch and wait for Internet radio to mature. Better to continue to invest in the broadcast product while Internet radio evolves.
Now that an Internet radio leader has emerged, broadcasters can develop a competitive strategy to defend against Pandora, and the services that might overtake it.
Broadcasters owe Pandora their thanks. Pandora’s success is a textbook example of doing a lot of things a little better than the competition, something broadcast once knew, but seems to have forgotten.
Fortunately, even with Pandora’s tremendous on-line lead broadcasters can close the gap by adapting key elements of the company’s success.
Lesson 1: Marketing is key.
Pandora has out-marketed everybody, broadcast and on-line competitors alike.
The company has a cool laid-back persona from its logo and website to the folksy emails it sends out. It solicits user input, and takes every opportunity to thank their users for listening.
The company’s Music Genome Project has given Pandora a unique position. It is little more than a marketing gimmick, but it has effectively created the appearance of a listener benefit not found elsewhere.
Arbitron's PPM focus on exposure rather than listening has deflected broadcast’s priorities away from marketing and positioning. The importance of differentiating a radio station will play an increasingly important role as broadcasts transits to digital.
Lesson 2: Make radio personal (again).
Tim Westergren, founder and chief strategy officer, has been a tireless booster of Pandora. Like a general personally leading his troops into battle, Westergren has traveled the country meeting with users and promoting his product.
At every stop, in every interview he takes the opportunity to position Pandora as the future of radio, taking every shot at broadcast he can.
What is the face of broadcast? Too many listeners see broadcast as a business full of large corporations run by greedy suits who see listeners as a commodity.
Broadcast radio needs to understand that it has an image problem, one that the NAB and RAB efforts have only worsened (think Radio 2020).
Broadcast needs to rethink its image as a product catagory. Broadcast needs a positive face and image.
Lesson 3: Listeners want a sense of control.
Pandora claims the Music Genome Project (MGP) creates the perfect personalized radio experience. Type in an artist, and Pandora will start streaming songs by that artist along with similar artists.
Harker Research found that MGP had little to do with Pandora’s appeal. Listeners just want the ability to listen to an artist when they want to.
The message for broadcasters is that listeners want some control and the ability to listen to specific artists. This can easily be added to a broadcast group’s streaming package.
Lesson 4: Radio needs to be everywhere.
Pandora has been aggressive in making its service available on many devices. Users can stream the service on every mobile platform as well as Google TV, Tivo, and several Blu-ray players. NPR has pursued a similar strategy quickly developing apps for every device.
Broadcast streams must be available everywhere and on every device people use to listen to audio.
Lesson 5: Make it easy to listen.
People want easy access to their stations, not tens of thousands of stations they will never listen to.
The Pandora player is elegantly simple. Users can quickly find their custom streams with a minimum of distractions and clutter.
Broadcast has gone the other way, aggregating dozens and even hundreds of station on websites and applications that make it difficult to find particular stations.
Compare the simplicity of Pandora’s iPhone app to Clear Channel’s iheartradio. Pandora users hear music the moment the app launches. One has to go three pages deep in search of a radio station to listen on iheartradio.
Lesson 6: Radio is still a local medium.
Broadcast’s most powerful strength is its localism. Pandora understands this and is trying to develop a local sales strategy.
As broadcast migrates to the Internet, radio needs to remain a local medium. Services like iheartradio and AOL Music downplay broadcast’s most powerful tool, localism.
As the migration proceeds, large groups may have a more difficult time than small local groups making the transition. Small groups will feel no need to aggregate hundreds of stations into a single Internet service.
A small radio group with a single smartphone app will offer listeners a simple gateway to hear their local radio stations.
If broadcasters take to heart the lessons learned from Pandora’s success and apply them, broadcasting will prevail in the digital frontier. Thanks Pandora. We’ll take it from here.