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Pandora crosses the line

January 6, 2007 in business models, music, pandora by JDA

Everyone needs to eat, but Pandora has officially upset me with its newest revenue source: pre-roll commercials. I loaded a station on pandora expecting to hear music and instead heard a commercial for McDonald’s Dollar menu. One of Pandora’s big selling points is that it does not have commercials, the more commercials that find their way into the service, the less likely I am to use it. Pandora already makes money off sales of songs that people discover on the site and click through to buy on itunes or amazon. I did this last week, I had an itunes gift card and chose to buy some songs I had bookmarked on Pandora, I used the links on Pandora to make the purchases. That’s one Pandora revenue stream, but they’ve also sold out their site design in the past turning it into an ad. Now they need another revenue stream? I understand that this is guaranteed revenue compared to the click-throughs which I’m sure most users rarely use, but this goes completely against what the service is supposed to be about. So, should I switch back to last.fm?

Update: Because I love when companies do this, I’d like to point out that Tom, Pandora’s CTO, has left a comment on this post.

Pandora sells out - again.

14 comments

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January 6, 2007 at 10:53 pm

Tom Conrad

Right now the audio ad is just a test — we’ve put it out there to see what our listeners think. It’s running for a limited time, and only a small subset of our visitors are hearing it. There’s just the one ad you heard.

Your responses are just the kind of thing we need to hear during this period; so thanks for blogging your thoughts.

There are significant costs associated with delivering Pandora and we have to find ways to cover those costs to be able to continue to deliver the service. We’re always trying to strike the right balance between keeping the site going and not doing anything that takes away from the experience of listening to Pandora.

I really do hope you’ll stick with us as we sort through all of this; we certainly value your feedback.

Tom
CTO @ Pandora

January 7, 2007 at 11:16 am

Josh Amer

Tom - Thanks for your comments. If you search for pandora on my site, you’ll see that I am and have been a big fan for a while; that’s why this new revenue source was a little upsetting. I understand the dilema, I typically leave Pandora open in the background and use it inactively, so any ads on the site would be lost on me and other similar users. So yes, audio ads do get my attention, but not in the way you’d like.

One thing I’ve always liked about Pandora was the way the site was monetized by enhancing the service. Giving me the opportunity to buy songs enhanced the service without interfering with any of the reasons I came to the site. Even the various visual ads that were used never degraded the service even if they went largely ignored. Now with audio ads, I’m a little turned off.

Especially annoying, is the fact that every time I change stations an ad plays. So, if I change stations 3 times within 5 minutes I have to hear three ads that cannot be skipped all for the same product. I may (and that’s questionable) be able to accept the ads if it was not possible to hear them so frequently and if I heard more than one ad.

I want Pandora to succeed and I want to continue to use the service, but if audio ads become a larger part of the service I may look elsewhere.

January 7, 2007 at 4:24 pm

Tim

I think Tom has been getting a lot of negative feedback because of creep of advertising into the music stream. I’ve got a site going to post ideas, questions, and criticisms of Pandora over at…

http://ideabox.crispyideas.com

and another site for sharing your stations that is growing in popularity.

http://pandorastations.crispynews.com

Thanks!
Tim
Pandora profile:
http://www.pandora.com/people/pandorastations

January 7, 2007 at 5:45 pm

Frank

Well, I’ve switched stations at least five times recently and have only heard the ad once. Even if I’d heard it (or others) more, I’d hardly mind. I don’t think most of Pandora’s users and potential users are too opinionated about this. Heck, Magnatune and my favorite NPR station advertise themselves much more frequently (between each song and when the station is opened, resp.).
Ads that adapt to our musical interests would really be a hook, though. It’d be quite a project, but hearing ads about shows and CD releases (or just seeing such ads), would be a draw to users and might pay, too.

January 7, 2007 at 6:01 pm

Josh Amer

Frank - I like the idea of ads that are relevant, and I probably would have been applauding the move to audio pre-rolls had the ad been relevant in any way. The repetitive McDonald’s ad however, didn’t cut it for me.

I think more people will be turned off by this than you think. I think a lot of users enjoy the commercial free aspect.

January 16, 2007 at 10:09 pm

Tom Conrad

We’ve shared some of our thoughts on this topic over on our blog:

http://blog.pandora.com/pandora/archives/2007/01/pandora_audio_a.html

We’ll continue to follow the thread here of course, but we’d also welcome your comments and feedback on our post as well.

This audio ad in question was a test and the dialog that’s taking place now is exactly the kind of thing we need to help us make good decisions about how advertising on Pandora will evolve. Thanks to everyone that’s participated to this point. Looking forward to the continuing discussion.

Tom
CTO @ Pandora

February 13, 2007 at 12:18 pm

Frederic A.

I’m another big fan of Pandora. I am glad I have not yet come across the Mc Donald ad and wish never to have to listen to audio ads either.

On the other hand, I loved the sponsored page in connection to the type of content delivery. I am now integrating a similar option of ad display for a site I currently co-own. In fact, I have saved quite a few screen shots from Pandora to help me in designing my site’s template.
Now, striking the balance of a sponsored page without dwarfing the content will be the challenge.

Frederic

December 14, 2008 at 7:46 pm

Margaret

I used to be a big fan of Pandora but I will stop listening if they keep playing audio ads.