Pandora posts loss as revenue increases 117%

[landtuna]

With such a huge jump in revenue you'd think they could get it in the black. Perhaps their biz model needs work. Glad I passed on their IPO.

Pandora, which makes the bulk of its money selling ads, is betting that its revenue will grow faster than its costs as its share of radio listening increases.

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/08/pandoras-earnings-beat-expectations-drives-shares-up.html

 

[TheBigA]

They need to diversify. They will not make profits, and continue to grow to the satisfaction of stockholders as long as their only product is music based internet radio.

 

[Casey]

"Pandora, which makes the bulk of its money selling ads, is betting that its revenue will grow faster than its costs as its share of radio listening increases."

Very possible. However, their advertising department is very inefficient and have so many ad reps that it's not even funny. They are finally figuring some things out. They are realizing that not having ads on some smart-phones costs them money, and that video ads pay more. But they are slow learners.

They can and I have not doubt will try to get more subscribers. Subscribers are difficult to get, but will give them a solid base. For this reason, Slacker is profitable, and Spotify is or is expected to be by next quarter.

 

[TheBigA]

They can and I have not doubt will try to get more subscribers. Subscribers are difficult to get, but will give them a solid base. For this reason, Slacker is profitable, and Spotify is or is expected to be by next quarter.

But therein lies another rub: How many people will subscribe to all three? The pool of potential subscribers isn't infinite. More competitors in the field is bad for profits. The only tool they have is subscription price.

 

[Casey]

You bring up a very good point. Currently, we have too many services. I can name at least 11 existing on-demand services and at least 7 radio subscription services with many pending products entering either or both fields. The competition is only beginning.

However, the on-demand and customized radio revolution is also only beginning. Only a tiny fraction of the potential subscribers has been tapped, with ample room for any company to grow.

I do think some people will subscribe to two different services if the services offer what they want. I subscribe to a radio service, as well as an on-demand service. Currently I would not give up either, as no service currently available offers both a good customized radio service as well as a good on-demand service, although Slacker comes the closest. I know several people with similar thinking.

And the subscription price is certainly not their only tool. The service in general is what sets them apart. All have different sized catalogs, all have different web/software players, different features, etc. If subscription prices were truly their only tool, then Napster which is the cheapest of all on-demand services, would have the majority of the market. Similarly, Pandora should have many times more subscribers than Slacker, only they don't because they lack the features.