Aiming to catch up to rival streaming music services iHeartRadio and Spotify that have staked out claims in the podcasting business, SiriusXM Radio says recent updates it has made to Pandora have made it easier for producers to submit content. In addition, improving technology that will match music and spoken word content is helping it become a podcast player as well, the company said. CEO Jim Meyer laid out a three-pronged approach Thursday during a conference call with analysts. It involves combining technology, curation and content as a road map for Pandora and its owner SiriusXM Radio in the podcasting business. Building a “very robust technical structure” is the first step, he said, including the development of advertising technology that will allow the company to better target and tailor ads to listeners and win the support of marketers in the process.
“Most podcast advertising is very rudimentary and not personalized. Frankly, this area is ripe to be disrupted and improved with better ad technology and better targeting. And here we are unquestionably strong,” said Meyer. AdsWizz, the advertising technology company that Pandora purchased for $145 million last year, is a key piece of that effort. “I’m very excited about the ad tech platform at Pandora and the continued progress we are making there,” said Meyer.
Pandora and SiriusXM have also been putting more focus on content, most notably striking a multiyear deal earlier this month to bring The Walt Disney Company’s Marvel Entertainment brand to the audio space. “To us, it is not about quantity,” Meyer said. “That doesn’t mean we don’t want to have a vast library of stuff available. To us the podcasting game is all about the value of the quality of the content and we don’t believe that many of the big entertainment brands have weighed in yet.” He said the company has also made it easier for podcasters to submit their shows with a new self-service hub for creators. And he noted they’ve also added more exclusive podcasts pulled from SiriusXM content.
Scott Greenstein, SiriusXM’s President and Chief Content Officer, said thanks to the public and free RSS feeds that distribute most shows, Pandora has quietly accumulated nearly 7,000 podcasts on its platform to date while spending virtually no money on content. “Our strategy on Pandora and SiriusXM is no different than our other content strategies. We want to find the best content that will truly make a difference and also act as a fuse to have our listeners find other content,” he said. “The fact that many big names, both individual and big brands, aren’t in the business is the opportunity that we’re most excited about.”
Improving recommendation tools and aiding podcast discovery remains a work in progress for the company’s technical teams. In recent months Pandora relaunched its mobile app with a new “For You” tool that offers both music and podcast suggestions. “Early data shows that this is driving discovery, giving users greater access to on-demand music and leading people to experience more content than ever before” said Meyer. “Among its benefits, For You will also help grow Pandora’s podcasting platform as well by exposing users to even more types of content.”
Greenstein thinks podcasters will find the same benefits that the record labels have enjoyed through recommendation capabilities. “Once Pandora’s algorithms are able to align your music taste to your podcasts and you can surface podcasts the way they surface music, it’s an entirely different game. Because as the music industry learned, the issue is whether you can curate well and surface well when there is a tremendous amount of content out there,” he said.
Spotify has so far spent more than $400 million to build a podcasting business, but Meyer said nothing similar is planned for Pandora. “We’re taking a very disciplined approach to this,” he told analysts. Meyer said they may look at “doing some small things” with outside partners. “That’s not an earth-shattering kind of investment,” he said, adding that a decision hasn’t yet been finalized about whether it would be better to stay in-house.
Pandora Users Fall Again
SiriusXM reported Thursday that Pandora monthly active users during the third quarter totaled 63.1 million, down 8% from a year earlier. And total ad supported listener hours were 3.32 billion in the period, also down 8% from last year. Meyer noted both declines were smaller than in the first half of the year. He also told analysts Pandora is no longer losing money, thanks to cost efficiencies that came with being part of SiriusXM. Pandora also had its best quarter ever in terms of advertising revenue, with total ad sales growing 8% during the third quarter to a record $315 million.
Meyer told analysts that not only has the addition of Pandora brought the combined SiriusXM-Pandora reach to about 100 million users, but it has also helped it rapidly speed up improvements to its digital products, both in and out of the car. “The Pandora acquisition has broadened our skill set to include an advanced, market-leading digital advertising business and has made us much bigger outside the car. This nicely complements SiriusXM’s excellent in-vehicle position,” said Meyer.