Pandora’s The Best Radio on Radio, But Herein Lies Their Biggest Problem

Andrew Wise [ http://wisestartupblog.com/author/andrew%20wise/ ]

September 10, 2008

Pandora [ http://pandora.com/ ] is a great service for listening to music, but I think their main strength may be their biggest weakness. Music fans have a ton of different of places to get music entertainment. TV, in the form of music videos, inserted into programming, and in movies. Fans can listen to the radio in the car, on the iPod (or Zune), and online. Then we have CDs, MP3 players, and MiniDisc, and combined it’s hard for one medium to attract a lot of attention.

Usability Does Not Equal Profitability

Pandora has done a great job of capturing music fans attention with their 1-step programmable radio station, however, I think they may have done too good of a job.

To get started on Pandora, you type in the artist you’re looking for, hit play, and you can get a steady stream of music that you’ll like for the next 12 hours.

The problem is: you never go back to the site. You simply keep the site open in another tab, and go about your day’s business. Interaction is key to capturing more pageviews, and generating more advertising revenue for your company, but Pandora’s ease of use is counter-intuitive to this model.

Press Play and Call it a Day

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With Pandora’s recommendation system, the majority of content you’re going to hear leaves little room for error, so a user isn’t going to be constantly going back to the site to +/- songs, and being forced to limit the number of times a user can skip a song further deters users from interacting with the site.

There’s not enough interaction on the site to keep the user engaged. Pandora may be receiving over 200k visitors per day, but how many of them are actively interacting with the site? They may be at work, completing work, or chatting on IM or just leaving the music on while they clean the house. The point is, they’re not interacting with Pandora as a service, Pandora is just the background music.

This is a great problem to have if you’re streaming roll-through advertising and each listener can ‘hear’ your ads, but that’s not the case. Pandora has put a hard-line against audio advertising, which we may seem them going away from in the very near future.

An Engaged Viewer is Worth Eight Regular Viewers

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“an engaged viewer is worth eight regular viewers” - OMD research

Comparing Grooveshark [ http://listen.grooveshark.com/ ] to Pandora is night-and-day. On Grooveshark there are any myriad of actions a user can take: search for a song, add a song to a playlist, view similar songs, smile songs, frown songs, share songs. All of which help to engage the user.

Pandora’s solution lies in their application. Sure, audio ads will help them meet their bottomline, but their inherent flaw is what makes them so great. It’s dead-simple to listen to great radio, but great-radio doesn’t keep people engaged and selling advertising.

Here’s What Pandora Should Do

Pandora should be actively looking to license out their radio as custom applications for portals. If users are going to be listening to Pandora radio in another tab, and browsing someone elses site, you might as well get the Pandora player on the other sites, and start bringing in the licensing royalties.

Wouldn’t it be nice to be able to listen to music while shopping on your favorite online retailers? You listen to radio while you’re in their brick and mortar stores, why not online?

Do you have any suggestions for Pandora as they try to further monetize their highly successful product?