1

New study says Pandora is “in jeopardy”; offers analysis of market drivers in streaming music

clear voice - title 250wClearVoice Research, a market intelligence company founded in 2006, released a 50-page survey analysis of the streaming music industry entitled Media Review: Music Streaming Services Market Profile. The report analyzes results of a 1,010-person survey of U.S. Internet-using adults. Survey questions explore how users consume music and other audio (news, sports), their awareness of streaming music brands, and their considerations when evaluating services.

The conclusion that Pandora’s market-leading position is jeopardized derives from the study’s meatiest section: Market Driver Analysis. There, survey results are pushed through a modeling process to create “A detailed understanding of competitor strength and weakness.” One of the outputs is that Spotify and Grooveshark are favorably poised for growth in the cohort of 10 streaming services measured.

clear voice - streaming channelsPandora’s purportedly threatened position is somewhat contradicted in the Market Driver Analysis, since it, too, is one of the most favorably positioned. The dire forecast for Pandora is also addressed in the Executive Summary, which cites two rationales. First, Pandora’s early-mover advantage will erode as awareness of other brands elevates. Second, increased competition will tighten the market generally.

iTunes Radio is called out for its quick awareness growth in its eight months of operation — a point similarly made in The Infinite Dial 2014 from Edison Research and Triton Digital. In the ClearVoice survey, 15% of respondents were aware of iTunes Radio. (Pandora scored 88%.)

We question the repeated call-outs of Grooveshark as a potential up-and-coming competitor, given its operational difficulties. (This point is unrelated to the Grooveshark experience, which we have used enjoyably, as with the other music services.) Grooveshark has been multiply sued for copyright and licensing issues by major labels, with potential damages reported up to $17-billion, and has suffered removal of its mobile product from important app stores. We speculate that its prominence in this report is a reflection of data modeling, stripped of business considerations. (We have reached out to ClearVoice Research with several questions; no response as of this post.)

The report is nothing if not analytical. This is the work of people who clearly value data modeling and crunching. In broad strokes, six market drivers inform the study’s major conclusions. They are:

Capacity to listen to music the users wants to hear

  • Ease of use
  • Mobility
  • Ease of sharing
  • Price and value
  • Advertising exposure (less being better)

 

clear voice - drivers

 

Diving deeper, the analysis spits out actionable knowledge related to how much these factors matter to potential users. So, for example, it is less dangerous to increase ads than to reduce customization, by a statistically derived amount. It’s as if this report were striving to be a Moneyball for streaming music companies, and the many charts of granular analysis are absorbing. One is the Price Elasticity chart, illustrating projected subscriber drop-off for specified subscription increases at certain price points:

 

clear voice - elasticity

 

The paper is front-loaded with broader, less brain-twisting metrics, such as adoption of specific services and channels. AM/FM radio is given an 84% usage figure — notably lower than other ratings.

 

clearvoice - channels

 

We recommend a first-hand look at Media Review: Music Streaming Services Market Profile, not because we necessarily endorse the analyses, suppositions, or conclusions in this report, but because it is a substantial and interesting work that deserves to be part of the conversation.

Brad Hill

One Comment

  1. I disagree about Pandora’s demise. Almost every auto maker has or will have Pandora built in to the dashboard. Every DirectTv customer has Pandora built in.
    I think this report is seriously flawed, in my humble opinion

Leave a Reply to Jon Scott Cancel reply

Your email address will not be published. Required fields are marked *