Let’s hold off on the revenue discussion for a second, and focus on audience growth. If you moved your cume 10% higher, you’re probably feeling pretty good about your performance, especially without the old tools like Film House commercials or massive billboard showings.
But if you’re Pandora, you’re feeling really good about your year. They started 2010 with 40 million registered users, and finished it out with 75 million – or an 87.5% rise over a twelve month period.
As in the world of digital entertainment and social media, once a brand reaches a certain level, it is harder to attack them. That’s the secret behind Facebook. Just getting well past the 550 million mark pretty much guarantees that a large portion of the population simply feels it must use Facebook in order to stay connected with their worlds.
As Columbia University professor of digital media, Sree Sreenivasan, recently told NPR’s Morning Edition, Facebook’s massive numbers essentially ensures its ongoing dominance: “Facebook has an enormous gravitational pull at the moment. That doesn't mean that it will always be the best or most popular social network. But it's very difficult for competitors to kind of break through and have a real mass appeal at the moment. I could join a new social network, but my friends won't be there. My family won't be there.”
Pandora may be entering a similar space. As CEO and founder Tim Westergren recently noted, the Internet pure-play radio station has now reached “critical mass,” powered largely over the past couple of years by mobile sign-ups. In fact, a whopping one-half of new Pandora users are entering via a mobile device.
So what is Pandora doing that broadcast CEOs might emulate? Here’s my list:
- Build infrastructure. Radio used to be about this, too, back in the days when land was purchased, towers were built, and transmitters were purchased. Today, most stations are spending as little as possible on engineering and technical needs. Or they’re simply focusing on the old broadcast model, and skimping on the digital side.
- Don’t bet on one outlet. In fact, Westergren is placing chips on just about every number on the table. He knows they won’t all come up winners, but he doesn’t want to miss any distribution outlets along the way. Radio is still broadcast heavy, focusing smaller investments on digital platforms.
- Don’t expect quick returns. Pandora doesn’t ask “But can we make money on this?” every time the company considers an investment. Critics may say that like many digital players, Pandora hasn’t figured out the monetizing piece – yet. But that was the case with Amazon, Google, and Facebook, too. They built lots of infrastructure and bet that user growth would translate to future profits.
- Be cool. They realize that in an environment with iPads, Droids, and other sleek toys, it’s important to have a radio service that gives the user a sense of cool when he/she uses it. “Oh, is that Pandora?” is the question that radio companies would love to hear about their stations.
- Focus on the customer experience. They work hard to create a mechanism that is fun and user-friendly. Radio’s digital efforts are often clunky and difficult for listeners to manage. Web sites are often very busy and confusing, making it difficult to access the content that consumers might enjoy.
- Watch the clutter. At least, not yet. Westergren and his team will be hard-pressed to keep commercials to a minimum, while not breaking the promise to his millions of registered users. He may not find a way to walk that line, but for now, the lack of long commercial breaks is a Pandora USP.
- Provide a quality streaming product. I truly wish that most radio stations could make the same statement. But in this case, the pure-play station is the winner. It sounds better, buffers less, and is easier to listen to. Why is that when there’s a little “picket-fencing” on an FM signal, everyone runs around to fix it, but when the stream is lousy, no one cares?
- Have a face. Westergren is a great rep for his company, and that’s one of the hallmarks of most successful media companies. As vast and global as the great ones become, there’s a persona attached to many of them. Steve Jobs, Jeff Bezos, Sergeyi and Larry, Mark Zuckerberg, Rupert Murdoch, Mel Karmazin, etc. Maybe this is what Bob Pittman will bring to Clear Channel, but radio needs more of its charismatic, dynamic CEOs to step up, get out front, and say and do the right things.
- Attack the dashboard. Radio’s entitlement to in-car dominance is coming to an end, and there’s no strategy in place to push back – or even keep up. New innovations, like Toyota's Entune and Ford’s AppLink, point the way to where Pandora is going, and where other content providers will quickly follow.
- Go mobile. Again and again, Pandora (and Facebook) have been fueled by the growth of mobile. Radio will have to do more than launch streaming apps. Broadcasters need a mobile strategy to remain a viable part of the biggest thing in technology since the Internet.
Like it or not, broadcast radio as we’ve known it is competing against Pandora. And what transpired for Westergren’s baby in 2010 should be a vivid example to radio’s CEOs that the game is changing. Westergren isn’t playing by radio’s rules – he is writing his own playbook. Broadcasters can look down on him or write him off at their own peril.