Pandora Shares Fall on Heels of Spotify Launch

By Beecher Tuttle July 14, 2011

Pandora Media shares took a fairly sharp hit on Thursday , following the U.S. launch of popular European music subscription service Spotify.

Shares of the newly-public company fell a full 6 percent after the news broke, leaving the stock price floating just under $17 as of mid-day. Pandora shares have been on a mini rollercoaster since the digital music service company went public in June at $16 per share.

Although Spotify will be a competitor to Pandora, the two services are actually quite different. Spotify offers users both ad-supported free listening – similar to Pandora – and an all-you-can-eat $5 per month subscription service that cuts out the ads. Both of these options are for computers only.

Users who want to take Spotify's catalog on-the-go can sign up for a $10 per month service that works on the majority of mobile devices. To date, Spotify has attracted around 1.6 million paying customers, according to the AP. The service currently has more than 10 million registered users.

"The key is to get them invested in the experience," Ken Parks, chief content officer and managing director of Spotify North America, told the news source. "You spend 1,000 hours in an experience like Spotify building playlists, it sort of becomes part of your life."

The biggest similarity between Spotify and Pandora is that neither company has been able to turn a profit. Since it opened its doors 11 years ago, Pandora has lost a total of $92 million, including $1.8 million in fiscal year 2011. The American company's $16 per share IPO price gave it a market value of around $2.6 billion, which is 19 times more than its revenue totals from last year.

Spotify has had even more trouble breaking even. The European music service reportedly lost $26.7 million in 2009, forcing the company to add more limits to the free listening time that it offered users. The hope was that the move would encourage more members to sign-up for the pay service

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.


Beecher Tuttle is a TechZone360 contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jamie Epstein

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Apple Goes Social with Video Editing App

By: Alicia Young    8/26/2016

The goal is to offer simple video editing with tools that appeal to millennials and upcoming generations-the people who grew up surrounded by social m…

Read More

How Do the Year's Threat Predictions Match Reality?

By: Special Guest    8/24/2016

Last year, Fortinet's FortiGuard Labs global threat research team made a series of predictions about cyber threats in 2016. We are now halfway through…

Read More

Automakers Invest in Wearable Tech Pilot Programs

By: Lindsey Patterson    8/24/2016

The advent of wearable technology has recently generated a number of creative products. Consumers check for email messages using "smart" watches and i…

Read More

AI's Major Role in EU's New Data Privacy Regulations

By: Special Guest    8/23/2016

Earlier this year, the European Union passed the General Data Protection Regulation - landmark legislation addressing data protection and privacy conc…

Read More

Broadband Delivered by Fiber Proves Better than Alternatives

By: Doug Mohney    8/23/2016

We're a couple years out on an unprecedented boom in broadband, with new wireless schemes, 5G, high-flying drones and constellations of satellites cov…

Read More