A few days ago, on the 16th and 17th of November, both Pandora and Spotify made some seemingly unrelated announcements. Brian McAndrews, the CEO of Pandora, announced that the company is acquiring Rdio, a shoutcast service currently undergoing bankruptcy. It seems that Pandora will acquire the tech and the employees of Rdio, while its former CEO and the service itself will remain outside Pandora’s network. The Pandora CEO, Brian McAndrews, explained in a talk with the company investors supporting the new acquisition that the ultimate goal of Pandora is to manage to evolve beyond its audiostream roots in streaming audio services.
The second announcement of these past few days, coming from Spotify, another well-known brand in the niche of streaming audio services, stated that it plans to open insider data to the larger public, revealing how exactly their users choose and rate the available music, and on how the audience listens and interacts with the artist hubs on Spotify. Basically, this means an increased level of transparency about all Fan Insight data collected by the streaming audio service.
What do these two announcements have in common? Both of them reveal the struggle of two audiostream companies who are looking for new ways to expand their services and up their game. With the success of music video streaming services like YouTube, the profitability of online radios and audiostream services like the ones we discuss here has mostly dwindled. The small companies are being bought out or go out of business (like Rdio and Beats Music, to name only two). The larger players, like Pandora and Spotify, need to find ways to diversify their services (and their forms of income) while remaining competitive, and they need to find them fast.
What These Changes Mean for the Streaming Audio Industry
First of all, the fact that these two companies (since we’re only talking about changes made or announced this past week) are struggling to expand beyond their original confines means that the streaming audio industry is in need to change as well. The popularity of such companies and brands has been pretty constant, even if not overwhelming. Nowadays, users flock to these services either when they just want a good playlist resounding from their computer while they are occupied with work, or, especially, in order to record streaming audio directly from these services, in order to have the music files for later use. For those of you interested in doing that fast and easily, check out our older post on the Top 5 Streaming Audio Recorder Software.
While they still have a database of constant users and things are still far from being truly desperate, it can be easily foreseen that if things continue along the same trend lines, these businesses will cease to be profitable in the near future. Their profitability is pretty limited right now, anyway. Streaming audio services haven’t been able to increase their profits so far, and the costs they have (through the deals signed with the artists and the music industry) are usually high enough to overshadow any attempt at revenue growth.
Finding new ways to service their audience in order to keep it loyal, and at the same time finding new ways to gain revenue is indeed a very necessary survival tactic for any audiostream service. The piece of Spotify news about making their Fan Insight data openly available is precisely about that: increasing revenue. It is a move targeted at artists and their managers in order to convince them to buy targeted ads through their service. The Spotify press release has explicitly pointed out that some artists (including Ed Sheeran) have successfully used the company’s data in order to promote their tours to superfans, thus managing to sell more tickets to their events. Tidal, a new company in the streaming audio niche, recently purchased by Jay Z, has a similar pitch to artists and managers.
Second of all, in regards to their service to regular users and not artists and companies, these services are also upping their game. Pandora isn’t the only audio service that is implementing changes like bringing video content to their audiostream (in an effort to limit the loss of users in favor of YouTube) or starting to offer its users footage from live performances. Some services (like the aforementioned Tidal) have even begun to take on the role of a traditional music label, aiming to help discover and promote new talent.
Examples could go on almost limitless about how various streaming services are trying to improve their offer to both the public and the artists and the music industry. This is all done as part of an effort to become much more than just another internet radio, in an age and time where internet users aren’t content with simply having internet radios anymore. This can only mean good news for music fans everywhere: the streaming music industry is upping their game and bringing everyone higher quality, diversified services.