Market Analysis of Pandora.com                1         Title:       Market Analysis of Pandora.com         Executive Summ...
Market Analysis of Pandora.com                                        2ContentsWhat is Pandora.com for ......................
Market Analysis of Pandora.com                3What is Pandora.com for       In brief, Pandora.com lets you create your ow...
Market Analysis of Pandora.com              4       Music Genome Project       Pandora.com continuously classify contents ...
Market Analysis of Pandora.com               5       Currently, the data for automobile users are not available from the d...
Market Analysis of Pandora.com                    6With assumption that the analytics include the data both Web and mobile...
Market Analysis of Pandora.com                 7First impression has problem       I entered Michael Jackson and it create...
Market Analysis of Pandora.com                 8ACTIVATION STAGERegistration requires unnecessary field       While I stay...
Market Analysis of Pandora.com                9Free trial requires no additional user info       As a registered user, I c...
Market Analysis of Pandora.com                    10       Suggestions: registered users should have more benefits, and su...
Market Analysis of Pandora.com                   11       relationship and loyalty from both musicians and their fans. Thi...
Market Analysis of Pandora.com               12       while reading comments about a song they are listening. But whether ...
Market Analysis of Pandora.com             13Appendix 1 - SWOT Analysis Summary       Strength                            ...
Market Analysis of Pandora.com                  14Appendix 2 - Conversion Analysis Summary       Conversion      Issues   ...
Market Analysis of Pandora.com                 15Appendix 3 - Key Customer Engagement Metrics       Metrics               ...
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Market analysis of Pandora.com

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This report was created as part of my Social Media Marketing Certification project which I completed in Jan 2013. It looks into current approach for customer conversion of the Website, and suggests strategic improvements necessary for the company.

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Market analysis of Pandora.com

  1. 1. Market Analysis of Pandora.com 1 Title: Market Analysis of Pandora.com Executive Summary Through conducting a user Touch-Point Analysis of Pandora.com, multiple issues affecting conversion are found in the Web design and in the multi-tier users benefit structure. Public domain Web analytics also reveal low monthly active users and low retention rate. Improvements to its services and customer value proposition are suggested in this report to help Pandora.com sustain competitions. Author: Dixon Lau Independent Market Analyst Contact: dilausj@gmail.comAuthor: Dixon Lau© 2013 all rights reserved Page 1
  2. 2. Market Analysis of Pandora.com 2ContentsWhat is Pandora.com for ................................................................................................................ 3Multi-tiered Users Benefits Structure ............................................................................................ 3Differentiations ............................................................................................................................... 3Sources of Revenue for FY 2012 ..................................................................................................... 4Market Share................................................................................................................................... 4Audience Demographics ................................................................................................................. 4Web Analytics ................................................................................................................................. 5Conversion Analysis ........................................................................................................................ 6Conclusion ..................................................................................................................................... 12Appendix 1 - SWOT Analysis Summary......................................................................................... 13Appendix 2 - Conversion Analysis Summary ................................................................................ 14Appendix 3 - Key Customer Engagement Metrics ......................................................................... 15Author: Dixon Lau© 2013 all rights reserved Page 2
  3. 3. Market Analysis of Pandora.com 3What is Pandora.com for In brief, Pandora.com lets you create your own radio stations to play your favorite music anywhere you go. When you are a registered user, you can play your created stations from the Web, IP TV, entertainment devices at home, mobile devices, and also in your car audio systems. It also connects with other social media for you to share your listening experience with friends.Multi-tiered Users Benefits Structure The main focus of Website of Pandora.com is to acquire listeners. Both non-registered and registered users have access to the same features, and both are subject to receiving advertisements. There are the three tiers of users benefits: Non-register user - Songs listening, searching, sharing, and creation of radio stations - Subject to audio ads, display ads and video ads - Available over Web, Mobile Apps, home devices and automotives Registered user - Storage of created radio stations for use across all channels - 24-hr free trial of subscription benefits Subscriber at $3.99/month or $36/year for individual consumer - No Advertisement - More bandwidth for potential better quality - Changeable Website background graphics ("Skin") - Less interruption from Pandora announcementsDifferentiations Pandora.com differentiates from its competition with technology and its multi-platform delivery capabilities. Delivery Platform for Home & Automobile Pandora.com has integrated its API with over 23 major automobile brands, and over 450 home video-audio devices such as Ruku for IPTV, and connected Blu-Ray players. Registered users can create radio stations that they can play from the web site, mobile app, IPTV, and possibility in their automobiles, and can truly bring their favorite music with them. Business Solution For business such as restaurants to play music in public locations, a commercial music licenses is required by law. Pandora provides a set-top-box solution for a $25 monthly subscription.Author: Dixon Lau© 2013 all rights reserved Page 3
  4. 4. Market Analysis of Pandora.com 4 Music Genome Project Pandora.com continuously classify contents title by title based on their proprietary methods, which they call the music genome project. The result is used to improve title and genre searches, and the ability to automatically select titles that you might like in your radio station.Sources of Revenue for FY 2012 Based on the January 2012 10-K report, Pandora.com monetizes the listening hours with advertisement incomes which constitute 87% of its total revenue. Subscription (Individual, and Business) $34M Advertisement (Audio, Display, and Video) $240M Total $274M (99% growth Y/Y)Market Share Pandora.com announced in the same FY2012 10-K report that it had 125 million registered users, and had a 69.8% market share of listening among the top 20 internet radio services in the U.S. However, this represented only 5.55% market share of all US radio listening.Audience Demographics The current data obtained from public domain indicate that the typical users of Pandora are young African-American and young Hispanic with annual income under $50K and with college or less than college education. Demographics Data Data Sources Age Primarily <18, & 18-24; Some 25- Alexa.com, 34 Quantcast.com Gender Female 52%, Male 48% Quantcast.com Has Children 51% yes Quantcast.com Education No/Some College, College Quantcast.com Location At school, and work Alexa.com Geography 96% US Alexa.com Ethnicity Primarily African-American, Quantcast.com Hispanic Incomes Primarily under $50K Quantcast.comAuthor: Dixon Lau© 2013 all rights reserved Page 4
  5. 5. Market Analysis of Pandora.com 5 Currently, the data for automobile users are not available from the data sources above. Pandora.com may have actual data for the persona of those users, and could use them for analysis.Web Analytics Alexa.com shows the average time on site is only 4 minutes and 19 seconds and the bounce rate is at 57% for October 2012. This means 57% of the visitors leaves without getting engaged and went to other sites immediately. For those who stay tune, listen on average about two songs. Quantcast.com shows that the number of monthly active users peaked to 1.7 million in the same month. Insidefacebook.com shows that the daily active users in January 2013 has fallen back to 967 thousand.Author: Dixon Lau© 2013 all rights reserved Page 5
  6. 6. Market Analysis of Pandora.com 6With assumption that the analytics include the data both Web and mobile users from allchannels, the derived retention rate is about 1.4%. This means that indicate a problem inengaging the 125 million registered users and attracting them to return.Conversion AnalysisBy conducting a User Touch-Point analysis on how Pandora.com interact with its users at thevarious stages of conversion, I found the following issues.ACQUISITION STAGEFront page design distracts from main business goal The main business objective is to get the user to start creating a radio station and starts experiencing the service. However, in the home page, the hyperlinks under the text entry box are distraction. You are detracted to explore the help menu instead. Suggestion: Education about the other distribution channels is better off done in a different page. Distraction from conversion Conversion occurs when user creates a station to play any music. Distraction from conversionAuthor: Dixon Lau© 2013 all rights reserved Page 6
  7. 7. Market Analysis of Pandora.com 7First impression has problem I entered Michael Jackson and it created for me a new radio station screen. However, first song played by the radio station was from Sarah McLachlan. Once a song started to play, there was no easy way switch to a different song or create a different radio station. This initial experience was discouraging me from experiencing further with the service. Suggestion: Pandora.com should serious consider improving the Web user experience. I entered Michael Jackson to create a new station But got Sarah McLachlan instead!?Author: Dixon Lau© 2013 all rights reserved Page 7
  8. 8. Market Analysis of Pandora.com 8ACTIVATION STAGERegistration requires unnecessary field While I stayed longer, advertisements started to appear. But these ads were not relevant to me or to the music I was listening to. To investigate further, I activated my account by registering with my email address. It asked for my birth year which I think was unusual. But even with that information, non-contextual advertisements were still streaming to me. Suggestion: Not having advertisement is not necessary a preference for every individual users. But have the ability to turn ads off and on, or receiving advertisement relevant to my choices may be more valuable than just having no ads at all. Got Match.com ads! But not my types! Register with your age?Author: Dixon Lau© 2013 all rights reserved Page 8
  9. 9. Market Analysis of Pandora.com 9Free trial requires no additional user info As a registered user, I could activate a 24-hour free trial without entering any credit card information. This made withdrawing very easy. In fact, it was automatic. Suggestion: When Pandora.com is able to provide more significant benefits to subscription users, they should consider changing the trial process to one that requires credit card information upfront.REVENUE STAGENeed more significant benefits to subscribe. The better audio quality is not detectable over the headphones connected to the computer. The Ads window is simply blanked out and there is no use of the free space for any better visual experience.Author: Dixon Lau© 2013 all rights reserved Page 9
  10. 10. Market Analysis of Pandora.com 10 Suggestions: registered users should have more benefits, and subscribers should have much more valuable features than registered users. For example, subscriber should be able to have more control over the titles and sequence within the playlists, and have more capabilities to find titles to add to their playlist.Lack variety of contents to compete with traditional radio Traditional radio has a variety of contents, but Pandora.com is currently restricted to songs and comedies only. This limitation is an obvious reason for the slow adoption of internet radio. Suggestion: To expand its market share into the traditional radio audiences, Pandora.com should expand its genre to include podcast for more types of contents. This will attract new audience as well.Lack gamification to encourage repeated listening Traditional radio stations use game to encourage audience tune in. For example, you play by calling in when a certain "song of the day" is played the next 2 hours, and the first caller gets picked up receives a reward such as tickets to a concert. Suggestion: Pandora.com should adopt or create similar games to give incentives to its users to login.Lack video contents to compete with new sites Music lovers naturally enjoy music video more if they are not restricted to listening over the head-phone in the office or school environment. The entertainment value of Pandora on IPTV is low when compare to other IPTV channels that deliver movies. Competitors such as last.fm and vevo.com are delivering music video contents in a similar fashion. Their platforms deliver to the Web, Mobile Apps and IP TV with more updated user interface design. These sites already have more monthly active users than Pandora.com and cut into the Pandora.com users base who wants more than just listening to music. Suggestion: Pandora.com should serious consider adding or merging music video to its contents to maximum the use of the home entertainment devices and mobile devices.There should be more than just delivering musics The opportunity of using Pandora to serve and promote the music industry is largely untapped. Musician interview, entertainment news about new album releases, and awards are examples of contents producing activities to promoteAuthor: Dixon Lau© 2013 all rights reserved Page 10
  11. 11. Market Analysis of Pandora.com 11 relationship and loyalty from both musicians and their fans. This will also facilitate licensing of new contents in the future. Suggestion: Pandora.com should consider expanding its service by serving additional needs for listeners as well as those for the contents providers. This is where product management should investigate what these communities like and wants, and decide on what enhancements are the most beneficial and profitable.Cancelation policy can be more explicit Upgrade screen for credit card information is straight forward. But there is no explanation of whether the monthly charge is pro-rated or not upon cancelation. To some potential subscriber, this could be a deal breaker especially if they prefer a yearly subscription. Suggestion: add clarity to the writing to show a better refund policy.REFERRAL STAGEEffectiveness of the social network of Pandora users The analytics about how much more listening would a user do because he/she finds out what other users in Pandora are listening. The users may stay longer in the web siteAuthor: Dixon Lau© 2013 all rights reserved Page 11
  12. 12. Market Analysis of Pandora.com 12 while reading comments about a song they are listening. But whether this is a typical user behavior is questionable. Suggestion: The web analytics may not reveal this information and actual focus group experiments may be necessary. The traditional voting of songs to be top 10 or todays hits is a good standard for promotion of more fan listening and more loyalty from content providers. If Pandora.com should consider recommending users to listen to the hits and top 10 radios in its display or audio ads.ConclusionBased on Web analytics and the Conversion Analysis in the above, Pandora.com must improveits user touch-points in its website, and further improve the value of its services in order tosustain competitions.Author: Dixon Lau© 2013 all rights reserved Page 12
  13. 13. Market Analysis of Pandora.com 13Appendix 1 - SWOT Analysis Summary Strength Threat  Ability to deliver its services  Other site such as Vevo.com and beyond Website, Mobile Apps and last.fm are already delivering music IP TV by having integrated with Car videos (but not just audio) over Audios, Home electronics. Website, Mobile Apps and IP TV, and have gain more monthly active  Ability to deliver to business users than Pandora.com. solution.  Any change in the regulation for  The concept of radio station statuary license that currently provides a means for user to collect enable them to reproduce music music for free instead of purchasing online may impact the viability of download from iTune or Amazon Pandora and its competitors.  Contents expanded to include  Strong competitions from well comedy and concerts. established companies such as Google for advertisement business,  Provide a platform for display ads, and Sirius XM for mobile listeners, audio ads, and video ads to as well as other internet radio automobile drivers. providers for listeners.  Traditional radio audience is still slowly adopting to Internet radio. Weakness Opportunity  Provide services on IPTV but  Contents owners such as musicians, without delivery of music video. song writers, and singers promotion can provide additional  Retention of registered users and to value which is largely untapped. capture longer listening durations.  Using gamification to attract  Website is becoming outdated and repeated users for growing the need new values to compete for listening hours and corresponding users. advertisement timeslots.  Expand services to deliver music video and other new contents.  Merger and acquisition of competitors is expected to be the on-going trend in this new industry.Author: Dixon Lau© 2013 all rights reserved Page 13
  14. 14. Market Analysis of Pandora.com 14Appendix 2 - Conversion Analysis Summary Conversion Issues Stage Acquisition Pandora.com front page has too many links which distract user from the main purpose of the site. It should be redesign to prove attractiveness. Software bug prevented the song of the selected artist from playing right after a radio station is created. This impacts first impression and contribute to the high bounce rate. Activation Registration requires entering the birth year which is unnecessary and could deter registration. The site seems to use the users age to determine whether single or dating ads. But this could be offensive to some users. Revenue Subscription benefits are not differentiating enough to make subscription worthwhile. The improved sound quality is not detectible. The turning off of ads is not a great value but counterproductive to the business since the majority of the revenue is based on advertisement. Retention Contents limited to audio for music and comedy. Other competitors have already started with music video and podcast of a variety of contents to compete better with traditional radio. Lack of gamification to encourage repeated visitors. Referral It is not evident that the users votes are used to determine the top hits. The top hits are not advertized in the display ads to encourage more listening. Lack of programming to promote content providers which other competing sites have already done to add value to attract repeated audiences.Author: Dixon Lau© 2013 all rights reserved Page 14
  15. 15. Market Analysis of Pandora.com 15Appendix 3 - Key Customer Engagement Metrics Metrics Data/Public Domain Analysis Registered Users 125 million mainly in USA Leading in terms of awareness in / 2012 10-K USA Bounce rate 57% About half the visitors switch away as soon as they come to the site. Average time on site 4 min. 19 sec. Users switch away after about 2 songs. Monthly Active Users Peak to 1.7 million in 2012 Retention rate is 1.4% of registered users. Extremely low. Opportunities to improve user conversion.Author: Dixon Lau© 2013 all rights reserved Page 15

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