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Can Pandora’s Focus On Artists Keep Apple And Spotify At Bay?

Pandora’s acquisition of Ticketfly is part of a broader strategy: Diversify its revenue sources while keeping artists happy.

Can Pandora’s Focus On Artists Keep Apple And Spotify At Bay?
[Photo: Flickr user JimmysInHiFi]

Pandora, the market leader in Internet radio, has been gobbling up companies left and right lately. But the 10-year-old music streaming service’s latest focus isn’t on snatching up machine learning tech and data scientist talent (it has plenty of that already). Instead, Pandora is ramping up its efforts to become an indispensable tool for artists themselves.

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The latest evidence of this strategic shift is today’s news that Pandora just dropped $450 million on Ticketfly, a younger, more consumer-friendly alternative to Ticketmaster. It’s unclear exactly how Pandora plans to integrate Ticketfly’s ticket-selling and self-promotion tools into its own product, but it’s a wise purchase that fits into a broader strategic goal for Pandora: keeping artists happy.

Two summers ago, Pandora woke up with a massive PR headache when the surviving members of Pink Floyd publicly lambasted the company for its efforts to cut the royalty rates it pays to artists—an ongoing point of controversy as music consumption shifts to online streaming (and a huge financial burden for companies like Pandora, which pays performance royalties to labels and artists that old-school, terrestrial radio stations are not required to pay).

The royalty issue remains a struggle for Pandora and a point of contention among investors. But since Pandora depends upon its inventory of musicians to keep listeners loyal to the service, the company has been working hard to provide other, non-monetary benefits to artists. One way to do that: become a service that’s as useful to musicians as it is to listeners.

That’s what the acquisition of Ticketfly—and its streamlined tools for ticket-selling and self-promotion—is all about. It’s also why earlier this year, Pandora snatched up Next Big Sound, a music analytics service that pulls in data from YouTube, Twitter, SoundCloud, Spotify, Bandcamp, and a bunch of other sources to help artists understand the bigger picture of their online presence. The same data is used by Billboard to help power its Social 50 online music charts, if that’s any indication of how valuable this type of information is to the music industry.

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Even before it bought Next Big Sound, Pandora was already focused on building out its own artist-focused tools, starting with last year’s launch of the Pandora Artist Marketing Platform (cutely shortened to “AMP”). AMP is a dashboard that lets artists get a breakdown of how their music is being consumed on Pandora itself: How many spins did their songs get? What are their most popular tracks? What percentage of users hit the “thumbs up” button on each song?

Pandora used to share this data with artists privately, as a helpful tool for helping cash-strapped artists plan their tours more effectively. By launching AMP, Pandora made that data available to everybody. With its purchase of Next Big Sound, Pandora essentially supercharged its artist analytics capabilities, offering artists a broad, detailed picture of how, where, and to what extent people are listening to—and even sharing—their music.

At this point, Pandora’s core product—niche Internet radio stations powered by a blend of human intelligence and collaboratively filtered algorithms—works pretty well (which is not to say Pandora is not always tweaking its approach to curation). But Pandora’s approach to music curation has now been mimicked in some form by everyone from Google and Apple to Spotify and Rdio. Having amassed so many copycat competitors over the last few years, the now-publicly traded Pandora is under more pressure than ever to stand out and, more importantly, to grow revenue in a crowded market.

One obvious way to tack on an extra revenue source is to start selling concert tickets (we wouldn’t be surprised if Pandora and its competitors are eyeing other music merchandise platforms, like Bandcamp). With Ticketfly under its corporate umbrella, Pandora just might be able to chip away at two problems at once: a new revenue stream to bolster its ad business while the royalty issue shakes itself out, and a useful, potentially lucrative service for artists. Because let’s face it: Internet radio may not pay the bills for people who make music for a living, but getting people to come out to their concerts at least has a shot.

About the author

John Paul Titlow is a writer at Fast Company focused on music and technology, among other things.

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