Pandora, the publicly traded music streaming service that helped define the medium by offering a sublime user listening experience, has announced plans to reorganize in a way that will optimize “business performance.”
Specifically, Pandora late Wednesday informed the press and investors that it is redesigning itself in a way that focuses on “ad tech and audience development,” a clear indication that it wants to cater more to Madison Avenue.
Pandora said the restructuring will create a “flatter structure for smarter, faster execution,” but did not elaborate on specifics other than that it would eliminate roles and save about "$45 million to adjusted EBITDA.
"The savings will be reinvested into growth initiatives including ad-tech, non-music content, device integration and marketing technology, toward which the company will redeploy existing employees and hire for new positions,” the company said.
"Pandora is the largest music streaming service in the U.S. People spend more time on Pandora than any other digital platform in the country, and as our dynamic industry evolves, we must also evolve,” CEO Roger Lynch said in a statement. “As I shared last quarter, we know where and how to invest in order to grow. We have an aggressive plan in place that includes strategic investments in our priorities: ad-tech, product, content, partnerships and marketing. I am confident these changes will enable us to drive revenue and listener growth."
Pandora also announced plans to expand its presence and workforce in Atlanta, providing a significant opportunity to add instrumental talent in a region with lower costs than the company’s headquarters in Oakland, California.
Joe, can you tell us more about what they mean by "ad-tech?"
If it's just better targeting of ads based on location or type of music, that's fine. I wouldn't mind hearing that, say, Pink Martini will be performing at the Arlington Theater in Santa Barbara next Thursday.
If it's personalized ads based on harvested personal information, either from use of my Pandora account or from personal data gathered by third parties, or both, that's a sure sign that the company has veered to the Dark Side, and I'll drop them in a heartbeat—and I say this as a Pandora listener and fan since early this century.
It now more essential than ever, when discussing advertising, to separate the wheat of branding and sponsorship (which we've had for the duration) and the chaff of direct marketing that looks and sounds like the real thing but in design and intent is a breed of spam. That the latter is normative now in the digital world does not make it right. (For more on this distinction, see http://j.mp/adwhtch.)
By the way, the list of stations in my Pandora account includes dozens for artists I don't know, because guests in our house, which are frequent and varied, have added them. Therefore any adtech aimed at my presumed tastes in music, based on my Pandora station list, are sure to hit far from the mark.
If we knew more, we would have reported on it, but this was part of a statement Pandora put out to investors as part of a restructuring of its operations.
Reading between the lines, I think they were saying that they plan to leverage ad tech to reduce the number of people they use to sell (ie. more programmatic) and to optimize the number of users and how they monetize them.
We hope to learn more soon and will report on it as soon as we do. As a publicily traded company, they will need to explain it to their shareholders, analysts, etc.
Personally, I always thought Pandora was under-leveraged in terms of using data about what music people like to target them mroe effectively for brands.