Pandora in Tune with Music Streaming’s Future

Pandora CFO Mike Herring isn’t worried about competing music-streaming services, like Apple's. In fact, he says, he welcomes them.

Pandora Media CFO Mike Herring will be the first person to tell you that music is a very personal experience. Embracing this philosophy is what has made Pandora successful. But Pandora’s customers are hardly listening alone: the company is the de facto leader in Internet radio, with more than 70-million active listeners — seven percent of radio market share in the U.S.

MikeHerring

Mike Herring, CFO

Enter Apple, which is nipping at the heels of Pandora with its September launch iTunes Radio. Apple already has 20-million active listeners, according to September numbers, so Pandora will have to diversify its offerings to stay at the forefront of consumers’ and advertisers’ minds. But the financial markets clearly still recognize Pandora as the sector stalwart. Its stock has  rallied since the iTunes Radio launch, hovering in the $24 to $28 a share range as of Friday.

How will Pandora continue to increase revenues and its listener base, turn its first profit, and innovate, all as competition from iHeartRadio, Spotify and Apple heats up? Currently, the  company’s focus is on increasing its share of the overall advertising dollars in radio. It’s also setting its sights beyond desktop and mobile devices.

Herring talked with CFO about the company’s long-term goals , taking on terrestrial radio through connected radio and plans to expand the company’s global footprint. The transcript has been edited for clarity.

Pandora remains one of the most popular music-streaming services, but Apple’s launch of iTunes Radio in September could pose a threat. How does Apple’s entrance into streaming radio affect the company in the long run?
In this space, we’ve had large, well-funded startups and big incumbents attempt to compete, and we’ve done pretty well. That said, Apple is a very impressive company. They’ve been a great partner to us over the years; we’re the highest grossing, non-gaming iOS app. We believe [Apple] is worthy competition, but we’ve also proven our ability to execute well. It’s really not an easy business to be in. You need scale to operate the business because the costs are high. Music is a very personal thing, and it’s fantastically hard to deliver consistently excellent personal music-listening experiences. We have done that better than anyone else. And that’s what’s driven our success to date. As long as we continue to do what we do well, we’ll fare well.

One thought on “Pandora in Tune with Music Streaming’s Future

  1. I doubt it will really hurt Pandora in the end. After all, a lot of those new iradio users might just be trying it out cause it’s a free trial. I didn’t even bother, and there are a lot of people like me. I don’t think it’s a better service, and I’m more than happy keeping pandora and torch music.

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