The Real Story Between Pandora and its Competitors

How Pandora Stacks Up Against The Rest

When it launched, Pandora Radio was a truly revolutionary innovation. Founder and current CEO Tim Westergren officially established the company with its website in 2005 and its mobile app in 2007, and in doing so laid down the foundation for what would become the internet radio market in American culture. For years, Pandora dominated the marketplace due in part to its free streaming service, its ability to discover new music for the listener, and its overall user-friendly experience.

However, in recent years many people have come to believe that Pandora has fallen behind its major competitors, like Spotify and Apple Music, due to its slightly smaller music library, the user’s lack of control over what song is playing, and most importantly Pandora’s apparent lack of profitability from not having an on-demand paid-subscription service.

But I’m here to tell you the Pandora-haters are wrong. When compared to its competitors, Pandora actually fares quite well.

Music Genome Project vs. Other Algorithms

The Music Genome Project is without a doubt the most complex musical algorithm ever created.

As Michael Miller explains in his personal guide to Pandora:

“Every song in the project’s database is analyzed by a trained musicologist and assigned up to 450 unique musical attributes. These attributes are combined into larger groups called focus traits, of which there are 2,000 possible combinations, such as rhythm syncopation, key tonality, vocal harmonies, and the like. Pandora considers these attributes and focus traits when creating a new station from an existing artist or song, and in determining which song to play next.”

Whereas Spotify relies largely on social media sharing, and Apple Music mainly plays newer hits through generalized stations and even playlists created by the artists themselves, Pandora’s algorithm takes it a step further.

Not only does the Music Genome Project provide listeners with related music through its customizable stations, but it also helps the user discover new songs and artists they wouldn’t have heard otherwise. Pandora is able to provide the user with a truly diverse listening experience, something neither Spotify nor Apple Music is able to do with their computer generic and user-reliant services.

Therefore, despite the fact that Pandora’s music library is smaller than both Spotify and Apple Radio’s, they are able to overcome this by consistently introducing new music and establishing variety for the listener.

Dominance of the Internet Radio Market

Even though Pandora has begun to face much stiffer competition in recent years, they still manage to own a large share of the internet radio market to this day.

While it is being widely perceived that both Spotify and Apple Music are rapidly gaining popularity in comparison to Pandora, that perception is a result of the increasing popularity of on-demand paid-subscriptions.

Chart depicting which companies own the largest share in the internet radio market

In actuality, Pandora continues to dominate the user side of things, with around 81 million active users per month and over 250 million total registered users worldwide. These numbers make up roughly 31% of the market. In contrast, Spotify only tallies in at 100 million total users; 50 million of which are paid subscribers. with Apple Music following in at just over 20 million subscribers.

This proves that from a pure numbers perspective, Pandora remains the most popular internet radio streaming service out there. They can attribute this popularity to their lasting brand recognition.

Forbes Magazine contributor Hugh McIntyre reiterates this point in his article about Pandora, when he states, “Pandora is now way ahead of the competition simply because it has built a powerful brand that tens of millions of people trust and use often.”

McIntyre also pointed out the fact that Pandora being a free service has allowed the company to introduce its product to the masses from the very beginning, therefore establishing solid brand awareness. That being said, it’s still going to take both Spotify and Apple Music years to achieve the type of brand recognition that Pandora has already managed to achieve.

Striking Back Against the Competition

However, the one knock on Pandora has always been that they’ve never added an on-demand subscription service to their repertoire. As of March 15th however, that changed with their introduction of Pandora Premium, their very own major subscription service.

While the average consumer may perceive this to be just another premium streaming service, Pandora has done all it can to steer potential customers away from this line of thinking.

As Tim Westergren publicly stated, “If you think about the solutions that have been offered to date, they’ve essentially been on-demand. We really don’t believe that’s the right answer — you see all the symptoms of a product that’s not meeting people’s needs yet.”

Logo for Pandora’s newest subscription service

In response to this, Pandora has designed Premium to lean heavily on not only the data it crafted through the Music Genome, but also on the data it collected on its listeners. It does this by compiling playlists based on the songs you “liked” from each individual station as well as all of your stations combined.

On top of this, when searching for specific artists or albums, Pandora also introduces its own recommendations, and when creating playlists it also gives you the option to add similar songs the algorithm feels you would enjoy in order to add variety to each of your playlists.

Spotify and Apple Music’s on-demand libraries on the other hand require the user to really dig for the songs they want to listen to, with more complicated ways of organizing your music on their respective interfaces.

This thought is reflected in Billboard writer Andrew Flanagan’s article about Pandora Premium, “If Spotify is for music lovers, Pandora Premium is aimed squarely at music listeners.”

This is why Pandora still remains ahead of the competition. Not only have they established years worth of brand recognition with a loyal following, but they have also managed to further advance the internet radio industry once again with their take on a premium subscription service. Spotify and Apple Music especially will need to further diversify their product and amass much larger followings in order to be put on the same pedestal as Pandora.

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