 RAIN 12/2: Massive scale key to Pandora ad profitability, says founder ·Dec 2, 11:57 AM WESTERGREN: ADVERTISERS WANT NUMBERS, AND THAT’S NOT CHEAP In yesterday’s Wall Street Journal story on monetizing Web radio streams (see RAIN here), journalist Sarah McBride mentioned that Pandora founder Tim Westergren expected profitability this quarter for Pandora. In an interview with MusicAlly published today, he explained a little more.
The key for Pandora, Westergren explained, was to build a large enough listener base that would attract big-ticket advertisers, then actually get those advertising dollars before the costs of building and maintaining that audience sunk the ship.
It gives one pause as to whether a more “niche” based webcaster might ever reach profitability, given the path Pandora’s taken. Might these types of webcasters be able to market their smaller yet likely more homogeneous audiences to more specialized advertisers willing to pay a premium? And while Pandora’s audience explosion following its launch on the iPhone is much-heralded, it’s tougher to monetize that audience via advertising, given the small screen size, Westergren admitted. Read MusicAlly’s interview here. LANE SAYS TARGETING AND LOW SPOT LOAD GIVE PANDORA LOCAL CLIENTS VALUE WORTH PREMIUMAnother tidbit from yesterday’s Wall Street Journal article came from some ad agency research that revealed a local L.A. buy on Pandora would run 20% than a similar buy on local AM/FM. But this makes sense, given the spot-load and targeting Pandora affords, explains Jennifer Lane in Audio4Cast. “On Pandora, the advertiser’s audio message will run between songs, not in a stopset with 2,3 or 4 other spots. It will be delivered to a registered listener – Pandora knows whether that listener is male or female, where they live and how old they are, so 100% of the advertisers impressions will be precisely in the advertiser’s demographic.” And that’s a value a local broadcaster can’t deliver. Read Audio4Cast here.
FLEXIO: A SOLAR POWERED RADIO READY TO BE YOUR BOOKMARKFlexio is a paper-thin FM receiver powered by solar cells. That makes it the perfect size to be used as a bookmark or be stored in a pocket book. The device is tuned to a single frequency and you can pick up a box of them for a city’s radio selection. The company’s brochure notes that the device could be tuned in to Wi-Fi or WiMax signals in the near future to access Internet radio streams, a development that may please the folks at Engadget. They have further coverage here.
GEO-TARGETED BANNER AD MARKET WILL GROW 16% A YEAR, SAYS BIA/KELSEYInside Radio reports today on a BIA/Kelsey forecast that indicates “geo-targeted banner ads will grow from $897 million last year to $1.9 billion in 2013, representing an annual growth rate of 16%. And look for local small- and medium-business advertisers to lead the trend. “Geo-display ads” allows the advertiser to specifically target local markets and at a lower cost than paid search. Read more in Inside Radio here.share: del.icio.us.  Reddit  Digg  Yahoo  Wink  Windows  Google  Newsvine 
CommentCommenting is closed for this article.  Other stories RAIN has upgraded (and moved)! RAIN 9/13: RAIN Summit Chicago takes place today! RAIN 9/12: First Summit in RAIN's hometown takes place tomorrow RAIN 9/9: Summer holidays, "doldrums" impact July Webcast Metrics, but audience up over last year RAIN 9/8: Clear Channel launches new customizable iHeartRadio beta; RAIN goes hands-on RAIN 9/7: Meet more speakers you'll hear at RAIN Summit Chicago in less than a week RAIN 9/6: Clear Channel taps The Echo Nest to take on Pandora RAIN 9/2: RAIN reviews Spotify's radio-like product Artist Radio RAIN 9/1: UK online radio aggregator Radioplayer campaigns b'dcasters to create "all radio" ratings RAIN 8/31: Execs from Merlin, Triton Digital, jacAPPS and more to appear at RAIN Summit Chicago |
“You have to have scale and it’s difficult to go from zero to scale because your ad capability can’t keep up with your growth,” he said. And that’s difficult, given the enormous overhead of royalties (”Well over half of the gross revenue goes to licensing”) and bandwidth. “You’re running faster and faster and your bill is growing faster and faster… Pandora has reached that scale but we burned through an awful lot of money to get here.”
This is great for Pandora. I am thankful for them including my music. The one thing I think they are going to run into a problem though is gaining listeners. Eventually they are going to have add all the music that they have been denying in their catalog. There is a law of diminishing return here.
— Matt · Dec 2, 12:51 PM · #
Pandora could be making money right now if they didn’t have such a bloated infrastructure and staff…
Other REAL radio stations and networks like 181.fm and 977music.com are making hundreds of thousands per month off of just regular banner and audio ads at market rates.
— Matt · Dec 2, 12:59 PM · #