Pandora Says Ads Set Its Music Free, Or Did Apple?
In a well-tuned and timely PR move, Pandora announced in tandem with its strong quarterly earnings that it was lifting the cap on free streaming to non-subscribers. A 40-hour limit on free listening was imposed earlier this year in an effort to drive more people to the paid subscription service and defray the continuing costs of licensing music into the Internet radio ecosystem. The cap will lift on Sept. 1.
The company said in a statement that its ability to lift the cap is “thanks to rapid progress in its mobile advertising.” Pandora reported just this week that its revenues were up 55% to $157.4 million in Q2 2013, but that the ad revenue piece of that was up 44%, while mobile was up 92%.
On a conference call with investors, company executives said that improvements in the ad business, in combination with “surgical techniques” such as putting stronger limits on the number of songs a listener could skip, helped increase the company’s revenue-per-minute and contain content costs.
Pandora’s announcement comes as Apple gears up to release its competitive mobile streaming product iTunes Radio. That free and subscription based service has already secured multimillion-dollar ad commitments from the likes of Pepsi, Nissan, Procter & Gamble and McDonald’s, according to a report in AdAge. The report states that Apple got 12-month commitments from the brands to run ads into the iTunes Radio audio stream. The marketers get exclusivity for their category for the year. The plan is to serve listeners an audio ad every 15 minutes and a video ad once an hour.
iTunes Radio will have the distinct advantage of being pre-installed on iOS, although Pandora is pretty much ubiquitous at this point and could easily maintain its superior scale via presence on Android and other devices. In its announcement, for instance, Pandora underscored that is available on over 1,000 connected devices and claims to be installed on almost a third of all new cars sold in the U.S. this year.
How cool is this? Radio wars heat up in 2013?