The news that Pandora was replacing chief executive Brian P. McAndrews with co-founder Tim Westergren got Wall Street’s attention, but that’s not all Pandora has planned for the company’s new image.
Rapid subscription growth in its early years earned Pandora a following topping out around 81.5 million, but competitors like Spotify and Apple Music have ground that growth to a halt, resulting in Pandora’s listener growth dropping to 81.1 million at the end of 2015. Its stock has suffered from this lackluster performance, dropping nearly 75 percent from its height in early 2014.
Pandora’s Plan To Stay Competitive
Although Pandora hasn’t released the details of its plan to update its format to one that may be more profitable, there is clearly one in the works. Last year it paid $75 million to acquire Spotify competitor Rdio; a more recent $450 million acquisition of Ticketfly, an online ticketing company, was clearly intended to be a move toward bigger returns.
Pandora’s goal of becoming an on-demand streaming music service able to compete with Spotify is big, to say the least, but its new business partnerships should help. Not only has Pandora retained Morgan Stanley to advise strategic planning, but it has also appointed Anthony J. Vinciquerra, senior advisor to investment firm Texas Pacific Group and former chief executive of Fox Networks Group, to its board.
Next Up For Pandora
It’s too early to say exactly what Pandora has planned, but time will soon tell. Pandora will need to negotiate with music companies in order to load content onto Rdio. If it intends to compete with Spotify directly, it will soon become obvious. According to the New York Times, the company intends to quadruple its revenue over the next four years to $4 billion with the help of its new purchases.
Pandora’s recent shuffles and acquisitions certainly point toward a hopeful reconstruction, but whether or not the on-demand music streaming field is already overly saturated remains to be seen. This year’s launch of Apple Music may help Pandora preview what the market is like without having to actually test the waters themselves, saving investors big dollars in the long run. With sagging stock prices, Pandora can’t afford to make any more serious mistakes.