- Next week online radio company Pandora is set to release quarterly numbers, expected to show its user base growing fast alongside the number of hours of music each user tunes in for.
- And while the company is a success story for signing up customers and addicts — 70 million users listened to more 1.33 billion hours of music in April — few are expecting it to be much closer to turning a profit from those listeners.
- RPM... is revenues per thousand advertising-supported listener hours.
- ...with an RPM of $26, Pandora made just a few cents for every hour a listener uses its free, ad-supported service. And it has to pay royalties for the music it is streaming.
- ...online radio is a game of massive numbers: pay a fraction of a cent per song, try and find advertisers who’ll pay something close to that to reach listeners, cross your finders for more paying subscribers, rinse and repeat billions of times every month.
- And the market for those fractions of a cent has some serious competitors: Apple is moving toward a streaming music service, Google launched its own music streaming product this week, and Spotify is making healthy inroads into America.
Read the full WSJ article here.
