03/08

Time to Trash Pandora?

The rhetoric is heating to the boiling point, and I think it’s about time to throw a bit of cold water on it.

I’m talking about Pandora – and who isn’t?

Radio Ink:

Pandora CEO Joseph Kennedy stepped up his assault on radio yesterday as he detailed some of his sales and ratings plans, hoping to take a chunk of radio’s $17.4 billion revenue pie.

Just for the record, that’s not an “assault on radio” since any party with an advertising-based medium has as much opportunity to invite the dollars of advertisers as any other.  Those are not “radio’s” dollars, they are advertisers’ dollars and they will be spent on the media that do their best to earn them.

And I once again must argue that if radio’s advertisers or listeners substitute Pandora for various radio stations it is because Pandora is, by a broad definition, radio – whether you like it or not, buster.  They are radio and you are Pandora – if you choose to be.

It’s nuts, the degree to which broadcasters imagine that Pandora is like some sort of virus, growing wildly inside the body of radio and somehow destined to kill it.  The truth is that Pandora is technology’s cutting-edge of radio. It is the beacon that reveals one of the key ways in which radio can demand more of an advertiser’s budget over time rather than less.

And here’s more overheated rhetoric, this time from Inside [All Traditional But Not Necessarily Online] Radio:

Analysts get error message about Pandora….While Pandora claims to have sold more mobile ads than any other company last year except Google, [Citigroup analyst Mark] Mahaney thinks “mobile monetization challenges” are especially problematic with more than 70% of Pandora listening occurring on…mobile devices.

Do I really need to remind anyone, let alone an analyst, that quite a lot of traditional radio’s advertising occurs on mobile devices – namely, the mobile devices that sit in your driveway? Indeed, one of the key advantages of mobile advertising on Pandora is that it’s utterly familiar to any advertiser who has ever placed a radio ad!

But wait, Pandora’s advertising growth is lagging behind its swelling audiences (and rights fees).  While it’s not at all crazy to fret about the pace of advertising growth in the face of blistering audience growth, let’s not forget that Pandora is enjoying blistering audience growth. And it’s not uncommon for monetization to trail growth – what’s uncommon is for monetization to precede it.  Should monetization be a priority for Pandora?  You bet it should.  And from what I can tell, it is.

For better or worse, the online audio marketplace is extraordinarily immature. But as this marketplace grows up, so will the commitment of advertisers and the dollars they invest in new ideas that work for them and their clients, yours or Pandora’s.

Pandora is not your enemy, Mr. Broadcaster.  Your only enemy may be an unwillingness to see the future as it is rather than as some fuzzy reflection of an idyllic past where kids played Cowboys and Indians, train sets chugged around the Christmas tree, everyone had a transistor radio, and nobody had more than a handful of choices.

In the long run, Pandora’s growth illustrates not the death of radio but its vitality – in all its forms.

The long-term success of Pandora’s model will integrate the music you want with who you are and where you are listening in the presence of useful, targeted advertiser messages.  This is not the “end” for radio, but an exciting new beginning.

Broadcasters enjoy magnificent scale and marvelous relationships with consumers and advertisers alike.  Don’t trash Pandora, learn from them.

They are most definitely learning from you.

My advice:  Don’t get bitter, get busy.

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