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Westergren thinks Pandora not worth 42 cents per month(?)

Pandora’s numbers don’t make sense to me. Have you done the math? Have I done it correctly?

Users LOVE Pandora, but their CEO Tim Westergren says the outrageous fees being charged by sound exchange will shut them down. If Pandora sold end users licenses, a $5 pack would get you over 10,000 listens.

Take a look a the fees that will shut down the site: the current rate is $0.0014 per song per listener. That’s 14/10,000 of a dollar. A little more than a tenth of a penny per song. If you listened to 10 songs each hour, licensing fees would cost around 1.5 cents per hour. At 20 songs per hour, that’s a killer 2.7 cents! How long would it take you to go broke on those fees?

To spend a whole DOLLAR on license fees, you would need to listen to 2,142 songs. online. streamed to you.

Half gallon of gas = 4000 songs

Raise your hand here, right now, if you think that listening to 2,142 songs isn’t worth a dollar.

If you have your hand raised, do you subscribe to cable TV? What about a Tivo? Have a DVR fee? Put you hand down then. You already pay a lot more for media than sound exchange is asking.

I pay plenty too: in fact, my monthly cable plan would deliver 260,000 songs worth of pandora licensing. But I wouldn’t bother stopping cable due to some notion that it could be free.

So then, the typical argument goes, “Sure, it’s cheap for the user, but expensive for somebody like Pandora, who has to pay that to all their users.”

Well, do they?

Does Pandora have to do it for free?

Compete.com says pandora has 2.7 million users/month and on average, each user logs 12 minutes on the pandora each month.

Let’s round that up to a half hour per day, or 15 hours a month.

2.8 cents per hour* 15 hours = 42 cents per month.
Then say you charge those users…42 cents per month.

Does Pandora (or the blogosphere) really have to complain about the tyranny of sound exchange or labels, or anyone else when Pandora hasn’t even tried charging the users? They also don’t have ads. Their only monetization strategy seems to be, what, amazon referrals?

535 songs per cigarette

While you’re waiting your turn to flame me, pause for a second. Remember that $50 hard drive upgrade you bought “because it was cheap”?

Guess how many licenses could you have bought instead? A: 107,000 listens. And since you won’t have that drive anymore after 3 years, its residual value is also zero.

Do you have .mac or mobile me? That $70/year fee is the same price as listening to 12,500 songs per month on pandora. That’s an awful lot to pay for a digital product google gives you free.

Are you still sure that sound exchange is charging too much?

Lots of us have 42 cents to save net radio

don't be a chump

Save net radio: buy a license!


Apparently, I’m not the only one who thinks that the service is good enough to pay for. So Tim…why not at least ALLOW people to pay? SINCE you haven’t tried to capture service revenue, you can’t say it won’t work.

Even ARS technica agrees that Pandora isn’t really trying:

“SoundExchange also argues that Internet radio stations could do a lot more to increase their revenue, become profitable, and pay their (arguably high) fees. As much as it pains us to say it, there may be a point here.”

I’m not too cheap, gentle reader. Are you?

“I’m willing to pay a subscription fee to Pandora. After all, we “pay” for radio by listening to ads. Why aren’t more people willing to pay for ad-free, streaming music?”
If anyone knows of a way to donate to Pandora or become a paying customer, please let us know.
Posted by: Justin

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I want to pay whatever the price it is… I can’t stop listening to Pandora!Posted by: Grck | August 17, 2008 4:55 PM

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Pandora is the best thing to come along on the internet EVER. If it closes up, it will be a tremendous loss.
Posted by: Bonnie Bejma | August 17, 2008 5:43 PM

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One Comment

  1. Posted August 19, 2008 at 2:47 am | Permalink

    At 2141 listens per dollar, soundexchange isn’t looking all too expensive compared to these prices.

    Apple TV: $229 = 490,000 listens
    Replacement ipod classic: $249 = 553,000 listens
    Extra apple remote: $19 = 40,714 listens

    It’s funny that you’ll pay more to skip a song with your apple remote than it costs to pay licensing fees.


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