Pandora user? There’s some big news today

Chris Davies - Jun 9, 2017
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Pandora user? There’s some big news today

Pandora and SiriusXM are hooking up, with a $480m investment into the streaming music business that will see it ramp up its defense against Spotify, Apple Music, and other rivals. Tipped to be in the works for some weeks now, the deal sees SiriusXM pump almost half a billion dollars into Pandora. That will allow it to adopt “a hybrid advertising/subscription model” that it claims will be more sustainable than others.

Pandora‘s appeal to listeners was always its push for personalization. Its custom radio stations built their tracklists based on user feedback – giving the music played a thumbs-up or thumbs-down – as well as learning algorithms. However, like other streaming music services, it struggled to transition users from the free, advert-supported tier to the paid subscription service.

In the meantime, newer rivals like Spotify and Apple Music have promised their own custom playlists, again using listener behavior to highlight new tracks and artists. Pandora responded with “Pandora Premium“, offering greater control over what listeners heard, but industry whispers suggested they were desperately hunting for a fresh capital investment.

SiriusXM’s $480m joins a further $200m, which Pandora has raised by selling off its Ticketfly business. Bought by Eventbrite for a combination of cash and a $50m note, it’ll see Pandora hand over the ticket search, purchase, and sharing service for the other company to run. However, a deal between the two firms will mean Pandora still gets access.

It’s not the only big investment SiriusXM has made in recent months, in an attempt to keep the company relevant. In late April, it announced it had acquired Automatic, a company making dongles which, when plugged into a car’s dashboard, turned them into connected vehicles. Although at first an unexpected combination, it actually makes a lot of sense given SiriusXM’s business.

Though best known for its satellite music services, SiriusXM also operates a data service for auto companies. That includes real-time traffic updates and similar, though until now it’s all been one-way: from SiriusXM’s satellite down to the car. The Automatic acquisition, however, opens the door to two-way communication, via the driver’s own smartphone.

“This strategic investment in Pandora represents a unique opportunity for SiriusXM to create value for its stockholders by investing in the leader in the ad-supported digital radio business, a space where SiriusXM does not play today,” Jim Meyer, Chief Executive Officer of SiriusXM, said of today’s news. “Pandora’s large user base and its ability to provide listeners with a personalized music experience are tremendous assets.”


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