04/22

“Pandora Helps Apple Sell More Music”

Maybe it’s time to stop asking Pandora how they feel about Apple’s pending entry into the streaming radio marketplace and start asking Spotify the same question.

So argues GigaOm in this piece.

And just-released data from the NPD Group tell the tale:

One third (38 percent) of U.S. consumers surveyed reported that it is still important to own music, and 30 percent believe that listening to albums is important. Among consumers who listened to music on Pandora and other free music-streaming services, 41 percent reported that owning music was important to them; in fact, many free streamers attributed buying more downloads to their discovery on a radio or via an on-demand service.

In other words, any service that promotes discovery is likely to promote sales of the content being discovered.

GigaOm bottom-lines it as follows: “Pandora…actually helps Apple sell more music.”

Now there’s a sentence to underline when any streaming radio provider sits down at the table to negotiate rates with the labels. It is also a point I and others have long argued.

Pandora’s model supports sales via iTunes, while Spotify’s model competes against it. That doesn’t mean Apple wouldn’t be looking to take a bite out of Pandora (after all, the big target is likely to be struck first), but this market continues to grow and Apple will no doubt accelerate that growth. Besides, the iTunes music model is about selling music, so as the NPD data suggest, any way Apple can promote discovery means they’re promoting sales.

So Pandora is to iTunes as radio is to iTunes; both are powerful engines that drive sales.

And both, it seems to me, should be based on revenue models that are not strictly advertising-based, but that’s a topic for another post.

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  • Anonymous

    This seems like kind of a ‘well, duh’ moment – After all, what is terrestrial radio but a ‘discovery’ platform that is designed to help listeners discover new albums and then hopefully buy them. Why shouldn’t the same model apply to digital streaming, only now instead of ClearChannel/the labels defining what is ‘in’ it is the user and their preferences. Being a bit of an audiofile, I think there is a really strong argument for musicians/labels to be talking about how the quality of streams will never be anywhere near that of CDs or lossless downloads, by focusing on selling music that sounds better than what you’re going to hear on Pandora, I think they could help make the better case for owning your album… assuming listeners can hear the difference

  • http://www.markramseymedia.com Mark Ramsey

    Audiophiles are a special breed, not necessarily representing the broader audience of regular folks. But your first point is interesting because it may be “duh” to you, but you have never negotiated with the labels for licensing rates :-)

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