Pandora: Shifting from Ownership to Membership

by Jeff Yoshimura, VP of Marketing

 

Congratulations to our friends at Pandora for a successful IPO!

 

Not only are we huge fans of Pandora’s service here at Zuora, we love the shift it represents. People’s musical tastes are no longer confined to certain artists and albums (if they ever were). We now want more options, a constellation of artists and songs, and we want help discovering new music as often as possible. Oh, and we want this at a reasonable price.

 

Think about it: we can either by a single album a month for $10 – 12 new songs by one artist. Or we can pay Pandora $36 a YEAR and get access to millions of new songs, free of advertising. And by “we” I mean the 90 million users they had as of the end of April, adding a new user every second. Now if that’s not a sign of a monumental change in how music is consumed, I don’t know what is.

 

What worked so well for Pandora – and has major potential going forward – is how they have managed their freemium offering. Pandora starts off users for free with an ad-supported model and then works to transition them to subscribers over time. And that’s just the start. Over time, Pandora can work on launching a whole series of new services and premium offerings to entice customers to subscribe or spend more on their subscriptions.

 

For example, Ford just announced Pandora availability through its Ford Synch system. That’s great. But if I’m a Toyota owner and listen to Pandora for free, I would absolutely pay for the premium service if I could get Pandora in my Toyota.

 

Looking at opportunities like this creates a whole new competitive playing field where Pandora or the likes of Rdio are directly taking on Sirius.

 

This is the Subscription Economy. It’s about rethinking everything we know about how goods and services are consumed, and looking at things through the broad lens of membership, experience and ongoing participation vs the narrow confines of a one-time interaction.

 

So to our friends at Pandora – we can’t wait to see where this leads you, and we hope others follow your lead.

Recommended for you

Strategic Insights from Zuora’s Subscribed Institute Executive Breakfast in London
How to create personalized subscriptions using Zephr
Unlocking the Power of First-Party Data: Agility in a Changing Digital World