How Pandora Kickstarted the Music Streaming Industry

In today’s world, everything we do is digital. From the way we communicate, to watching shows and movies, to even ordering food, it has shaped the way consumers think and act. To me, it’s crazy to think that all of this technology is still relatively new.

Pandora comes along…

In 2005, Pandora Radio first launched as a new online radio service. Pandora was truly the first of its kind and aimed to revolutionize the online music industry into the freemium/premium model. The freemium strategy is one where a service is offered for free to the majority of consumers, while a percentage of the consumers pay for a premium version of the service. This strategy works because Pandora has very low marginal costs, and they also generate revenue off of advertisements. They were a pioneer in the industry because they created an algorithm which would create playlists for consumers based on their music taste and what they had recently listened to. It allowed consumers to discover new music without having to look for it themselves. This was much more convenient than purchasing individual songs and albums to listen to.

Paving the way to the premium model…

Pandora launched their premium service in 2009 with no advertisements, an updated desktop app, and less limits in terms of usage. This is the model that truly made Pandora successful and allowed them to grow as a business. I also think that this paved the way for services such as Spotify and Apple Music to launch. For me, I prefer to use Spotify because it’s truly customizable and I can download the songs of my choice so that they can be listened to even without data. Because this industry is still growing and there is so much competition out there, Pandora needs to stay on top of their toes and innovate in order to remain successful.