It’s no secret that the music industry has undergone massive changes over the last ten to fifteen years. According to the Recording Industry Association of America, total US music sales have dropped an average of 8% each year since 1999, from $14.6 billion to just over $6 billion. Having heard this, you probably wouldn’t expect that in the first half of 2011, US sales are up by 1%. Okay, so it’s just 1%. But consider that in the first half of 2010, sales were down 11% year-over-year.
So what’s responsible for reversing this trend? Ever-increasing broadband speed has enabled mass media consumption on the web, paving the way for music discovery services like Pandora, Last.fm, Grooveshark and iLike. Because of these services, the average person can now find and listen to a more diverse body of music than ever before – and it’s catching on. Unique visitors to radio category websites has increased by nearly 19% since last year, with Pandora leading the pack at 11,824,629 in June 2011 – that’s 81% yearly growth.
Over the last few years, Pandora has made decisions to support growth of their user base and help them stay ahead of the competition, even if just barely at times. In 2008, the Pandora app became one of the most consistently downloaded apps in the Apple store. By 2010, Pandora was present on more than 200 connected consumer electronic devices ranging from smart-phones to TVs to Blue-ray players. It was in 2010 that Pandora began to break away from the other music discovery services and would attract more than double the unique visitors of Last.fm, traditionally Pandora’s toughest competitor, by year-end.
In February 2011, Pandora officially filed with the SEC for a $100M IPO, piquing even more interest in the service in the months leading up to their pricing announcement on June 15th. The company’s future may not be as bright though, as innovative alternatives to radio-style listening like Spotify, Music Beta by Google and Apple’s iCloud are beginning to gain traction. While these services are very different than Pandora – and from each other – there is no doubt that they pose a threat to the current music landscape. You can be sure we’re keeping an eye on it.
So, have you tried Spotify? Music Beta? iCloud? What do you think? Are you ready to abandon Pandora?
Eric Keating is the Vice President of Syndicated Products at Millward Brown Digital. When Eric isn't thinking about product development and digital marketing, he’s probably brewing beer, exploring with his wife and dog, or working on his home. Connect with him on LinkedIn or follow him on Twitter.