“We’re honored to have connected so many listeners with the music they love these past few years. Thank you for your loyalty and the opportunity to serve you.”
This is the message that Pandora’s Australian and New Zealand listeners received when logging into their now locked Pandora account. Yes, Pandora closed its flagship offices last month to cut costs and focus on initiatives in the United States.
The strategy will no doubt have an adverse impact on Pandora’s global active monthly listener count, which totaled to 76.7m in Q1.
According to Music Business Worldwide, this sets up the beginning of a new US-focused era at Pandora, which offloaded ticketing arm Ticketfly to Eventbrite for $200m last month – while selling an effective 16% stake in its business to SiriusXM for a $480m investment.
Sirius CEO Jim Meyer said: “As one of the two largest stand-alone streaming companies in the world today, we have long admired Pandora’s massive user base and popular ‘free’ [ie. ad-funded] consumer offering. SiriusXM today does not have a permanent ‘free’ offering.”
Meyer added: “In considering whether to enter the ‘free’ market, the question for me is very simple. Can [Pandora] deliver more cash flow for our shareholders? Honestly, the jury is still out on this question. But our investment in Pandora will help us to find an answer and give us a great toehold in this area on advantageous terms.
“We also will be able to learn more about the subscription interactive business and how our two companies might work together in the future, be it on upselling, cross-selling, sharing content, or sharing technology… we will only be a minority investor in Pandora, and our investment is not predicated on any kind of cooperation or synergies.”
Sirius CFO David Frear added: “[If] we had had a meeting of the minds on value, I think the two sides could have reached a deal to do a complete acquisition but that wasn’t there. And [Pandora] did need capital.
“We are very interested in the asset as we’ve said many times that we think that the team at Pandora’s done a great job building a brand and a significant presence in the ‘free’ radio space. And so making an investment to fundamentally a debt investment is a way for us and taking the board seats, it’s a way for us to get involved, and as Jim said, to learn the business more.” He added: “I don’t think you should be thinking of this as some big synergistic sort of opportunity. This is really about companies that are in two very different businesses. We’re in the subscription radio business that covers music, talk, news, sports, weather, and traffic. And they are in the ad-based business for music-only service and it’s quite – they are quite different.
“I think both companies have been very successful focusing specifically on those separate businesses. And then we’ll see what we can learn from each other over time.”
How do you think Pandora sizes up next to other music streaming services?