“Opening Pandora’s (Music) Box: How the Streaming Giant is Changing the Game”

Posted by on October 20th, 2015

The ensemble that is the music industry has always been an interesting beast to follow—for example, when MTV launched in 1981 or when President Bush (in 2001) declared 8-Mile rapper Eminem, “the biggest threat to American youth since Polio.” Whether you’re a musician, a music curator, or simply a consumer of music, the industry touches everyone’s lives in some capacity.

Over the past 15 years, the Internet has revolutionized the music industry. In fact, it is a reasonable assumption that many people younger than the age of 23 may not even know what a cassette looks like and can’t remember the last CD they purchased. While the Internet has allowed music lovers access to a seemingly limitless library of music, at the same time it has had a devastating impact on album sales thanks to music streaming services, leaving the live-performance vertical as the most profitable revenue stream left for artists to leverage.

Love them or hate them (think music purists vs Generation Z), the likes of Apple Music, Spotify, SoundCloud, Google Play and Tidal, just to name a few, are here to stay. However, there is one streaming service in particular I want to highlight – Pandora, the leading Internet radio company with nearly 3X the radio play of all other Internet radio companies combined– because it recently made a unique business decision to elevate its position in the market.

As a public company, Pandora’s shareholders have been pushing for a business move that would address its relatively low ad sales and effectively monetize an active user base of 79MM people.  It would seem this was not lost on management, as on October 7th, Pandora entered the ticketing business through the acquisition of San Francisco-based ticketing company Ticketfly. Simply put, this deal is a game-changer for Pandora and for the industry.  This merger allows Pandora to own the transaction from artist message to ticket purchase. The combined service has already generated great success by promoting concert tickets through their audio ads; now, with Ticketfly’s interface, Pandora can position tickets right at the point of music consumption via mobile and desktop. The deal will also give Pandora additional data that can improve the music and concerts recommended to listeners.

As this is the first deal of its kind for the Internet radio industry; I wouldn’t be surprised if we see Pandora’s competitors consider conversations with other ticketing platforms or align themselves with other segments of the music industry, causing an M&A frenzy. And with the concert ticketing industry amassing $30 billion in gross sales in 2015, it seems Pandora is controlling its own destiny and proving that it is, and always has been, a pioneer in the music business.