Again this week, a Maine small business owner told me, with conviction, that nobody listens to Portland radio anymore. "Everybody," said the business owner, "Is listening to Pandora."
In case you have been living inside a box for a while, I will tell you that Pandora, launched in 2005, is an online music service that plays songs it thinks you want to hear based on a set of preferences supplied by the user. The service is available for a fee without commercials or for free with commercials. According to Forbes, only about 5% of Pandora users value the service enough to pay for it.
Despite the perception of some business owners, traditional AM/FM radio still reaches 93% of all adults every single week. This is the same reach radio had in 2004 before Pandora was invented. In Maine, according to Nielsen, this means 699,526 adults tune-into a Portland station every week. On the other hand, only 69,980 adults tune-in to any streaming media service each. This includes Pandora, Spotify, and Apple Music combined.
Portland radio's dominance over Pandora and streaming media is also evident in a study by Edison Research that shows 52% of all audio media consumption is spent with traditional AM/FM radio. Streaming media like Pandora are not even #2. You can see from the chart below, streaming media are a distant #3.
Here is why there is little hope for Pandora. Once someone signs-up for Pandora, they quickly lose interest.
According to 2016 study by Bridge Ratings, LLC, the longer somebody subscribes to Pandora the less time they spend listening. The research shows this even more true today than it was just two years ago.
Investors Are Losing Confidence In Pandora
According to Forbes, from December to January, Pandora's value has plunged more than 35%. Forbes credits this loss to concerns that the company cannot generate enough in subscriber and advertising revenue to offset the enormous cost of royalties paid to the record labels. Additionally, competitors such as Spotify, iTunes Radio, and iHeart Radio are taking away Pandora's market share in a category whose growth has stagnated.
In an attempt to stave off the inevitable, Pandora introduced a new paid-subscription service this week. The new plan offers listeners an ad-free environment and the ability to skip songs. But investors remain unimpressed with Pandora's effort. Even with the news of an enhanced listening experience, Pandora stock closed at $13.45 per share on Friday of last week, nowhere near its peak of $37.42 in February in 2014
So as Maine small business owners contemplate trusting it advertising dollars to Pandora, they should consider this additional advice from Forbes. " You wouldn’t know it from all the media coverage focused on streaming video and streaming music, but recent Nielsen data shows radio actually has the most reach among American media consumers. It’s quite clear that we should all be paying more attention to radio, its reach and potential to help our businesses. It’s doing the job with expert efficiency."
Free Resources For Maine Small Business Owners