Why Is Pandora Worried About Its Content Costs?

-2.14%
Downside
8.38
Market
8.20
Trefis
P: Pandora Media logo
P
Pandora Media

  • Pandora isn’t profitable with the royalty rates it pays currently, which means that it needs to grow its revenues faster than content costs to reach a profitable state
  • For every dollar spent on content, the amount of revenues generated should increase in the future
  • However, the exact opposite is happening in the near term, despite the contribution from the ticketing business (no associated content costs) projected for 2016 and 2017
  • In 2015, Pandora generated over $2 for every dollar spent on content and this figure is estimated to come down to $1.70 by 2017

Pandora content vs revenues

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Pandora
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