In the race to provide mobile users with music and other streaming audio content, Spotify is clearly ahead of the pack. The streaming service boasts around 180 million total users between its website and mobile app, putting it head and shoulders above the competition. Now, though, a new challenger may now be on the rise. The Washington Post has reported that satellite radio company SiriusXM is set to buy the streaming service Pandora in a $3.5 billion megadeal, which may well give rise to a new audio entertainment empire.
If completed, this deal would combine SiriusXM’s 36 million North America subscribers with Pandora’s 70 million monthly active users, creating a dream team that could rival the industry-leading presence of Spotify. Together, SiriusXM and Pandora are on pace to bring in revenues of about $7 billion this year. Pandora’s investors are excited about the possibilities, as evidenced by the sharp 7 percent uptick in the company’s stock price in the first morning the deal was announced.
SiriusXM is similarly looking forward to a bright future.
“Together, we will deliver even more of the best content on radio to our passionate and loyal listeners and attract new listeners across our two platforms,” SiriusXM Radio CEO Jim Meyer told the Post.
SiriusXM has taken an interesting approach here, going after Spotify’s market share without calling attention to it. Meyer did not mention Spotify by name when announcing the Pandora deal, but he did describe the merger as a chance to “take share, you can guess where from, other audio platforms that are out there today.” Currently his company still has a lot of work to do before catching Spotify, which has over 180 million users. Additionally, 44 percent of those Spotify users are paid subscribers—another number that will be tough to match.
Pandora is hopeful that with SiriusXM as a partner, it will be able to monetize streaming music more easily. The two-fold goal is to use the new merger to fortify the company’s advertising business and increase subscriptions as well. Currently, most Pandora users listen to streaming music for free; Meyer hopes that will soon change.
“No matter who comes into one of our trial tunnels, no matter where they come in, our goal ought to be that as they exit that trial, somewhere, somehow, they are in a funnel which we’re monetizing,” he told the Post.
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