How Much Is Pandora Making From Its Subscribers And Users?

by Trefis Team
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Pandora earns revenues through advertisement and subscription fees, but its business model is heavily reliant on the former because it has been easy for the company to attract users owing to the availability of free content. However, a higher user count hasn’t helped Pandora because it doesn’t make much money per user. On the other hand, the company earns a hefty amount per subscriber, but that business hasn’t taken off because the content on offer isn’t attractive enough to provide many free users an incentive to pay for ad-free services. As a result of the aforementioned factors, the company hasn’t been profitable.

Pandora arpu

While the difference between subscription revenues per subscriber and revenue per user has historically been high, this gap has actually increased over the past few years. This trend is likely to go on in the future, which indicates that the company hasn’t been moving fast enough on the subscription side. Its strategy to launch on-demand music for a subscription fee is a step in the right direction, but it won’t overturn Pandora’s fortune.

Pandora Q&A

Subscribers not only provide more revenues but they clearly hold higher growth potential as well. Unfortunately, 77 million people use the service for free while just 4 million pay for it. The company would have to narrow down this gap and that cannot happen until the content and the service get significantly better, in terms of diversity and features.

Have more questions about Pandora? See the links below:

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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