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Pandora CEO Joe Kennedy is shrugging off competition from the likes of Spotify, saying his company’s primary goal at the moment is to “disrupt the broadcast radio market.”
Kennedy spoke about the company’s future plans this morning at the J.P. Morgan Global Technology, Media and Telecom Conference in Boston, Massachusetts, and highlighted that a 87 percent growth in listener usage put the personalized radio service on track to become the largest radio station in every market in the United States.
According to the company, Pandora now holds a 70 percent share of the online radio space and a 6 percent share of radio in total. This translates to 150 million listeners and in the last quarter, more than 3 billion hours of Pandora radio consumed.
The company increasingly faces competition, though.
Spotify now has reached more than 20 million users, according to a recent report by former Jupiter Research analyst Mark Mulligan, which puts it slightly ahead of Pandora’s pace at a similar age. Spotify is also introducing matchmaking apps to its on-demand service. Other entities, like Sirius XM, are also planning on rolling out personalization features.
Kennedy says he’s not concerned, saying it “doesn’t change the calculus of where consumers spend their time” and that the metrics he’s seeing indicate that consumers find Pandora to be the “best experience.”
Instead, Pandora’s chief executive has set his sights squarely on the terrestrial radio market and the estimated $17 billion in advertising spent there. “There’s interesting data out there pointing to fact that Pandora’s growth is coming at expense of listening to broadcast radio,” he says.
Pandora initially set out to sell its advertising nationally, especially in the top three markets of New York, Los Angeles, and Chicago, but Kennedy says he realizes that 70 percent of advertising is bought and targeted in local markets.
To steal that revenue, Kennedy believes the answer lies not in hiring a bigger advertising sales force, although he says there will definitely be more boots on the ground, but in focusing on “boring on the surface” areas: Getting ad buyers the audience metrics they need — hence the company’s new emphasis on the subscriber usage numbers — and integrating Pandora into the buy-side platforms the advertising industry uses to purchase air time on AM and FM radio. “Once that happens, it will be truly easy to buy,” he says, but adds that the “rating system has to come first.”
Pandora went public last July at $16 a share. Last month, its share price hit a nadir of $7.83, but has rebounded somewhat in recent weeks, closing on Tuesday at $10.83. The company is scheduled to report first quarter earnings on May 23 with analysts expecting revenues just under $75 million.
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