Pandora Premium to take on Spotify, Apple, early next year

Streaming service Pandora has officially unveiled its on-demand Premium product to launch in the first quarter of 2017 – and is ready to take on Spotify and Apple Music with what it claims will be the most personalised streaming service yet.

At its gala unveiling in New York, to advertisers and investors – complete with music from 1975 and Bastille – Pandora CEO Tim Westergren emphasised, “Premium means personal … and that Premium is the “first truly premium music service.”

He added, “If you think about the solutions that have been offered to date, they’ve essentially been on-demand,” Westergren commented at the unveiling.

“We really don’t believe that’s the right answer —you see all the symptoms of a product that’s not meeting peoples’ needs yet.”

“Giving the keys to the store is not the best way to find music,” he pointed out.

Pandora Premium has most of the features of its rivals, including ad-free streaming, a substantial content library and downloads for offline listening.

But to offer its customers a high degree of personalisation, it will use years of collected customer data (1 billion data points a day) and ‘thumbs up’ history to generate smart playlists with similar songs. New tracks and albums will be unearthed through a crowd-sourced recommendation engine tailored to individual tastes.

A new playback feature, AutoPlay, will create a streaming station based on a recently listened to album or playlist. It will pick the next song similar to the one that just finished.

Twelve months ago, Pandora shelled out $75 million for Rdio, which had gone into bankruptcy. It quickly set about stripping it of technology and staff. Premium even follows Rdio’s excellent design.

Rdio users could add a handful of songs to their playlists, but no more. Pandora Premium allows users to automatically add songs based on similarities in the Music Genome Project – which Westergren helped develop long before Pandora launched in 2005.

Pandora has been excitedly making changes in anticipation of Premium’s arrival, going through a rebrand. It expanded its internet radio offerings with Plus, a new improved version of its $5 a month Pandora One.

It is one of the few streaming services that offers a free service alongside two paid options. Aside from these two revenue streams is a third income source, the ticketing service TicketFly which it acquired last year, and which is expected to generate US$300 million in revenue by 2020. It also has a strong advertising and music research division that augments the diversity of the business.

The new service’s pricing is expected to be $9.99 a month. At this early point, Pandora is looking at hitting the 11 million subscriber mark by 2020 – small compared to Spotify and Apple Music now, and smaller given what those two giants plan to be by that year

But 11 million would make it the third biggest streaming service. Analysts say that if Pandora can convert at least 20% of its 78 million monthly free-streamers, then it’s on strong ground.

It won’t be a difficult target to achieve. Spotify, for instance, had a convert rate of 25% to become the world’s music streaming leader.

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