Pandora, Uber look to make music with drivers and riders

Pandora has made no secret of its desire to have its streaming radio service incorporated into as many cars as possible, and its technology is currently built into the dashboards of more than 160 automobile models. On Monday, it added potentially almost half a million drivers to its listener base due to a new tie-up with ride-hailing leader Uber.

Starting Monday, Uber is including Pandora within the app that Uber’s drivers use to respond to riders’ pickup requests. When drivers launch their Uber app, they are now able to touch an icon that goes directly to their Pandora account and bring up any stations they have already created. The new feature is available in the United States, Australia and New Zealand, the three countries where Pandora’s service can be accessed.

“This integration, which will allow drivers to play music on Pandora from directly within the Uber app, (and) will make it easier for drivers and riders to listen to the music they love,” said Bob Cowherd, senior product manager for music and media, Uber, in a statement announcing the deal.

Financial terms weren’t disclosed.

The move comes as Uber is spending more on expanding into new markets and trying to entice riders away from other ride-hailing rivals such as Lyft. Uber currently has a partnership with Spotify that let’s riders access their accounts with the music-streaming provider during their rides, and will soon offer a similar music-listening option from Pandora.

For Pandora, getting in front of as many potential listeners remains key to its business strategy. Pandora operates like a radio station in that listeners don’t call up specific songs to play, but instead create their own stations based on anything from a specific musician to a song to a musical style. Pandora’s own Music Genome Project then identifies similar characteristics of songs in order to determine what music to play.

But even though it has about 80 million subscribers, the majority of those choose to listen for free, with a few ads thrown in every hour. The company is facing growing competition from the likes of Spotify and Apple Music, with their monthly on-demand subscription fees, and as such, Pandora is pouring money into creating its own subscription service that will launch later this year.

It’s easy to see why Pandora would seek out deals with the likes of Uber. With approximately 450,000 drivers in the U.S. alone, who are spending hours a day in their cars, Pandora has the opportunity to reach a huge new customer base with its upcoming streaming-subscription option. According to Morgan Stanley analyst Benjamin Swinburne, revenue from music-streaming subscriptions reached $1.4 billion in 2015, a 40 percent increase over the $1 billion the industry reported in 2014.

Swinburne also estimates that music-streaming subscription revenue will climb to $2.1 billion this year, and hit $4.5 billion by 2020, the year that Pandora has set as a target for itself of reaching $4 billion in revenue.

“The music industry has found its growth strategy,” Swinburne said. “(It’s) subscription on-demand, and Pandora is positioned to help drive that growth.”

Swinburne said Pandora is in a position to negotiate favorable deals with music labels for the on-demand rights to songs that will “both leave its core business economics largely unchanged, and enable it to make money in on-demand” music streaming over the next few years.

“Most consumers will continue enjoying free radio,” Swinburne said. “(But) we think about 40 million on-demand subscriptions in the U.S. in 2020 is a reasonable estimate, with Pandora at a 25 percent (market) share.”

Photo: A car with the Uber logo inside the windshield. On Monday, Uber and Pandora said they were teaming up to let drivers stream their Pandora playlists directly from their Uber smartphone app. (Mark Ralston/AFP/Getty Images)

 

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  • Ed Greenberg

    If I ride in an uber car, it would be nice to have MY Pandora playlist, not the driver’s playlist.

 
 
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