Hard times all around for radio: Pandora adds commercials

KTMCDO

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In some ways, worse. Webcasters live under the threat, not currently enforced, of paying both performers and songwriters when they stream music, while radio only pays the songwriters. For services like Pandora, which create customized radio stations based on favorite artists, the revenue pressure has been intense.

We've previously sung the praises of Pandora, in its Web and incredibly awesome mobile incarnations (iPhone and Windows Mobile), but how the site paid its bills was always mysterious. It displays some advertising and makes affiliate money by referring buyers to iTunes and other stores; it also has a few sponsorships, like its "Energizer Forum." That never seemed like enough to cover the cost of all that commercial-free music, but users weren't complaining.

Pandora has recently rolled out ads between songs, though, moving into a format slightly more akin to traditional radio. CEO Tim Westergren told California's Press-Democrat that the commercials were just one of many things that Pandora was experimenting with, but that the service would never run as many as traditional radio.

But if it's a tough time to launch a new webcasting ad format, Pandora can take cold comfort from the fact that the ad market is hammering just about every sector. Ad pages in print publication saw a 12 percent drop in ad pages in 2008, with worse coming in the early days of 2009. Things are bad enough that even Google has just scrapped its program to sell print ads.

When Google and Yahoo report their new financial numbers over the next few days, we should know whether online advertising has collapsed at a similar rate or is proving to be the exception to a general downturn.
 

Jon

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If they're anything like the slacker commercials (once or twice an hour) it shouldn't be too bad, and shouldn't be detrimental to the listening experience. I do wonder if Pandora isn't the next to go the 'premium' route.
 

hank-the-dwarf

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The comercials are the same as on the slacker free service(about 2 an hour) considering how you can control these services as far as telling them what to play and whether or not to have a dj on the channel you create(slacker) i personally don't mind at all.
 

DAB

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Just remember for $36 a year you can subscribe to Pandora and rather you listen online or via one of the portable applications you will not get the commercials.
 

dlynx

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Just remember for $36 a year you can subscribe to Pandora and rather you listen online or via one of the portable applications you will not get the commercials.
Still, even at the $36 price point for commercial free, over a years time I just don't see it sustaining the costs of the licensing/royalty fees that webcasters are charged. Even at the the rates charged last year that have significantly increased again this year. Streaming radio has to be bleeding money at an extreme rate.

Online advertising is a joke at best unless you have a targeted audience that has a proven record of purchasing products online, and has a decent income level. A "free" service of this type, that attracts the something for nothing crowd significantly impacts their ability to attract quality high paying advertisers.
 

DAB

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OH I don't disagree with you Dan, I just thought I'd throw it out there that subscriptions are available. I never knew this from visiting the web site. I actually came upon the info much by accident, which seems rather strange to me.

I don't see the advertising getting them much and I think Pandora is likely to go under long before Sirius.
 

Jon

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OH I don't disagree with you Dan, I just thought I'd throw it out there that subscriptions are available. I never knew this from visiting the web site. I actually came upon the info much by accident, which seems rather strange to me.

I don't see the advertising getting them much and I think Pandora is likely to go under long before Sirius.
They came pretty close on one occasion before congress bailed them out with the new Internet radio law. Pandora is a nice service, but I don't see it being sustainable with that kind of advertising and no other revenue stream. Slacker has the G1 and G2 and the subscriptions, so they have that revenue coming in. As long as they don't spend like drunken sailors (like a certain satellite company that shall remain nameless) they should be fine.
 

snakester

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The other big flaw, IMHO, with the pandora formula is no premade stations. Sure, it's great for discovering music that sounds like your favorite band(s), but no premade stations like Slacker has makes it more of a niche product than real radio.
 

MNXMFan

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The other big flaw, IMHO, with the pandora formula is no premade stations. Sure, it's great for discovering music that sounds like your favorite band(s), but no premade stations like Slacker has makes it more of a niche product than real radio.

They actually did add pre-programmed stations not too long ago. Although I can't remember quite how to access them anymore.
 

snakester

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They actually did add pre-programmed stations not too long ago. Although I can't remember quite how to access them anymore.
Yeah, I never knew about them until I got my squeezebox. I still haven't found out how to get to them in the web player, but then again I don't use pandora at all on my computer.

There's one problem with their premade stations though, in my opinion: You can't make it not play songs you don't like, you can only tell it to not play it for a month. (at least on the squeezebox, is it different in the web player?)

I also haven't noticed ads, have they implemented them yet?