Why you will never meet Bob: The takeover of Ticketfly by Pandora
Imagine sitting in a train. Take a look at the person on your left hand side. Meet Bob. You don’t know Bob, and you will never get to know Bob, as Bob is staring out of the window with his headphones on. Look straight ahead again. There is a couple sitting opposite of you, sharing a set of earphones and head-banging on music you cannot hear. At the back of the train, you suddenly see your friend Denise, and you call out her name; unfortunately, she does not seem to hear you as she is fully engaged in a new Spotify playlist she just discovered. You decide to pull out your headphones and put on the new album of Mumford & Sons.
Music is everywhere. Music has been everywhere for decades, yet recently, a new technological development disrupted the entire industry; streaming services. Companies such as Spotify, Rdio, Apple Music, Pandora and Tidal are all engaged in fierce competition to attract most paying customers. However, these companies face two problems. Firstly, although customers seem to grow very fond of music streaming services – almost 15 billion numbers were streamed in the United Kingdom in 2014 (The Guardian 2015), and United States music streaming revenues surged to over 1 billion dollars in the first half of 2015 (Statista 2015) -, these services still do not make enough revenue to become profitable. Secondly, artists do not love streaming services as much as users do. We all can recall the moment that Taylor Swift decided to withdraw her music from Spotify, and other artists as Beyonce and Ed Sheeran have also attempted to get around the influence of these streaming services. As can be derived from the ongoing discussion regarding streaming royalties, it seems that artists do not feel treated fairly by these businesses (The Economist 2015).
However, yesterday Pandora announced a takeover that might mark a change in the relationship between artists and streaming services. With its takeover of Ticketfly, an online concert ticketing service similar to Ticketmaster, Pandora will soon be able to directly sell concert tickets to music listeners. Whilst services as Pandora and Spotify were already promoting the sales of tickets through ads leading the listener to third-party websites, Pandora has now decided to move the entire purchase process to within its own ecosystem.
Pandora can use its experience in data collection to specifically target customers that might be interested in concert tickets from a certain artist. Apart from strengthening the ties between listening to music and visiting a concert hence increasing the music experience for users, Pandora also strengthens bonding with artists by this takeover. As concert tickets sales is still booming business (Techcrunch 2015) and has even become the main source of income for artists (Forbes 2015), artists will eventually be able to leverage the enormous user database of Pandora and even specifically target their ideal customer, without having to pay any additional promotion costs.
For Pandora itself, the acquisition of Ticketfly might also create more opportunities to generate revenue, and perhaps turn into a profitable business on the long-run. Pandora seems to have found a unique way to use its massive amounts of data to increase value for both parties simultaneously in its two-sided market, therefore increasing pressure on competitors such as Spotify and Apple Music.
Do you think that with this step, Pandora has revolutionised the music streaming service industry once again, ensuring that Bob can get involved even further with his favourite bands? Do other music streaming services have to follow? Or do you think there is another answer to low profits and weak bonds with artists?
The Economist 2015, The dry stream of musicians’ royalties. Viewed 9 October 2015. Accessible via <http://www.economist.com/blogs/prospero/2015/09/music-business>.
Forbes 2015, Pandora’s purchase of Ticketfly finally good news for shareholders. Viewed 9 October 2015. Accessible via <http://www.forbes.com/sites/bobbyowsinski/2015/10/08/pandoras-purchase-of-ticketfly-finally-good-news-for-shareholders/>.
The Guardian 2015, Streaming: the future of the music industry, or its nightmare? Viewed 9 October 2015. Accessible via <http://www.theguardian.com/technology/2015/jan/02/streaming-music-industry-apple-google>.
Statista 2015, Music streaming revenues surpass physical format sales. Viewed 9 October 2015. Accessible via <http://www.statista.com/chart/3852/us-music-industry-revenues/>.
Techcrunch 2015, Pandora Acquires Ticketfly for $450m to sell concert tickets. Viewed 9 October 2015. Accessible via <http://techcrunch.com/2015/10/07/pandora-acquires-ticketfly-for-450m-in-a-bid-to-sell-tickets-to-live-music-shows/#.db6ey8:pyx4>.