Today at GigaOm’s RoadMap conference in San Francisco, Pandora CTO Tom Conrad revealed that his company aims to monetize the vast majority of listeners who pay little or nothing per year for music. Conrad explained that “Over half of the U.S. doesn’t pay anything for music each year”. He continued that another 40% of the population only pay about $15 a year, the cost of an album or two. While there are opportunities to build businesses on the 10% who are willing to pay more, Pandora’s plans to focus on monetizing the majority via advertisements. Other music companies might be wise to target the non-paying segment as well.
Conrad was asked about whether the rapidly growing Spotify was a threat. That service now has 2.5 million daily active users and 7.5 million monthly active users. Conrad said “I see Spotify as largely complementary to what Pandora does. Spotify’s CEO Daniel Ek says he thinks Spotify is the future of the record store, and that Pandora is the future of radio.”
Personally, if I was him I’d worry that Spotify could integrate a teachable radio feature similar to Pandora into its product. While it might not be as accurate, Spotify could significantly reduce the need for users to also visit Pandora by augmenting its listening on demand service with a satisfactory personalized radio. That certainly seems easier than Pandora trying to secure the licenses to offer on-demand listening.