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

Tech Gifts for Couples This Holiday

By: Special Guest    12/13/2017

If you're wondering what you should get your loved one this holiday, it's time you reframe the question. Stop thinking of the holiday as an occasion t…

Read More

Amid Cryptocurrency Mania, Coinsquare's goNumerical Raises CAD $10.5M

By: Paula Bernier    12/5/2017

The company that operates the Canadian digital currency exchange known as Coinsquare says it has raised CAD $10.5 million in new funding.

Read More

Your New Heart Monitor is an Apple Watch. Really.

By: Doug Mohney    12/4/2017

Looking at a new smartwatch or fitness wearable for the holidays? If you are concerned about your heart health due to family history or reason, Apple …

Read More

Amazon Unleashes Alexa for Business - Consequences Abound

By: Doug Mohney    11/30/2017

Today, Amazon Web Services (AWS) announced Alexa for Business, bringing Amazon's intelligent assist into the office. This shouldn't be a surprise to T…

Read More

Pai Makes His Case for Title II Repeal

By: Paula Bernier    11/21/2017

FCC Chairman Ajit Pai today made clear his plans to repeal Title II net neutrality rules. The commission is expected to pass his proposal at its Dec. …

Read More