Pandora can turn the corner

 Clair Cain Miller, in her May 24 NY Times article Ad Revenue on the Web? No Sure Bet ,

discusses the difficulty that Internet start-up are having in generating revenues. The article mentions an interview with the founder of Pandora, the Internet radio station. Pandora is finding it difficult to generate revenues from advertisers and well as subscribers. They attempted to charge a monthly subscription fee for the service. This did not go over well.  Now they are trying a hybrid model “freemium” .  This model charges the subscriber $3 per month for an ad free subscription.

 

The problem in my view is that it really hard to offer something free then later charge. We consumers are so trained that all on the Internet is free especially if we look long and hard enough for it. It’s just the way it has always been. 

 

Was just happening to consider the Pandora proposition over he weekend at my Memorial Day cook out.  We needed music for the out doors. Boom box radio was too much talk and the music from the station that my 20 year old nephew chose was too narrowly focused for a crowd of ranging from grade school to 1970’s era disco, Fusion, Funk.  Playing CD’s is too cumbersome. So I hooked my iPhone to my kid’s plug-in speakers.  I started the Pandora app- and the music that played for the next hour or two was mostly appealing to most of my guests.  The best part was the fact that there were no commercials or blabbing DJ’s.  There was enough appealing variety that some folks could tap a foot, strum an air guitar or sing along.

 

PANDORA IS GREAT FOR THE CONSUMER. Heck they have 10 million listeners per month. I would guess that as unemployment increased, this figure has gone up a bit – more people with more free time and probably listening to the Blues. My children listen to it while they do homework in the evenings. I listen to it in the car as I do my weekend choirs. It’s also great for my commute to Manhattan.  But in this type of economic environment how can service like Pandora survive as ad revenues drop off? Seems to me that at some point in time Pandora and Last FM (another Internet radio service) will have to begin taking audio ad’s after say the 10^th song.  Maybe it’s a 15 second commercial – a radio jingle Web 2.0 style for the Internet. I would imagine that banner ads on the web site would have limited appeal because this is an audio experience.

Personally this would not be obtrusive considering that 80-90% of the songs I hear are customized to my taste. This is still a small price to pay. The alternative is radio with way too much talking nonsense, or shuffle CD’s – lots of work and over half of the songs not so appealing OR play list from iPod.  The iPod  alternative is limited by the personal library- songs purchased. Satellite radio has always been a non-started for me – always got poor reception, and customer service was terrible. 

So could it be that Pandora and Last FM become the new radio media.  Customized selection of songs, with just a few commercial ads. Would need a dose of customized weather and news say every hour or so for a few minutes. Alternatively we could just press an icon to go directly to customized weather and news- something like a  RSS – Stitcher combination.   I see traditional radio on the way out in 5-10 years. Who needs it?