The Pandora Box of Mobile – The Sky’s the Limit

If you were at the Web 2.0 Summit in San Francisco last week, you probably heard Pandora Founder Tim Westergren share that SEVENTY PERCENT of their usage is through mobile venues.  Yes.  70%.  And having created a super-successful digital space for themselves, Pandora doesn’t see Spotify, iTunes, or any other competition eating their lunch any time soon.

Tim Westergren shared the following about the portability of the iPhone and its impact on Pandora, “Overnight it transformed our business. We almost doubled our growth rate. It changed Pandora from being desktop computer radio to being like real radio.”

One can’t completely appreciate the enormous (and growing) impact of the mobile industry without really understanding its past. I recently interviewed my longtime colleague, Anthony Stonefield, a leader in the mobile and digital industries, who literally pioneered downloadable song distribution in the 90’s and popularized ringtones worldwide in 2000 (creating today’s $8 billion ringtone market). Anthony also executive produced the worldwide mobile program for the Live 8 event, and the mobile charity part of Melissa Ethridge’s “I Run for Life” breast cancer campaign, among others. I asked Anthony Stonefield where he thought super distribution will take us in the next few yeas and to talk about SmartPhones and their broad effect on users.

“Smartphones put everything that you had on your PC into your hand… I think what’s happening now is that we’re unlocking the true internet. Until today, we have always thought that we are driving the web, but now, SmartPhones are reaching down into the emerging markets, to the next several billion individuals, and these people are creating revolutions, changing the face of the planet, because they’re getting their first real-time connection to the rest of the world, through SmartPhones.  As these phones infiltrate emerging markets, we have a whole new world to embrace… this is changing the nature of the human being and the way we interact.”

“My experience is that entertainment media is always consumed on impulse.  So the technical solutions are also part of this equation.  4G will eventually enable a distribution model that can scale, but until then, we face serious limitations of scale… 4G has a way to go before it can provide viable, reliable user experiences, but it does enable a way to discover and present media very rapidly.”

You can hear the entire interview here.

Getting back to the future, so to speak, Pandora’s founder explained at the Web 2.0 Summit that Pandora transformed from a simple desktop radio to a “real” radio when users started taking their iPhones and plugging them into their cars and living rooms.  It’s important to realize that, conceptually, Tim Westergren does not consider Pandora competition to Apple, Spotify or other subscription music services.  He considers it a streaming radio service, and does not charge for participation.

With revenue skyrocketing due to ad sales, similar to traditional radio, Pandora has forayed further into radio, actually developing programming and content – and perhaps even newscasts and “sports radio” broadcasts in the future, further solidifying them as the leader in this industry – at least for now.  Like any great industry, competitors WILL show up.  AOL, who could arguably be called the founder of online radio, relaunched its own product within hours of Westergren’s speech, with half of the audio commercials.  (And AOL Radio already carries ESPN Radio and ABC News stations.)

It’s hard to know if AOL will be the biggest contender in the mobile war, but with Smartphones becoming the “transistor radios” of the future, Pandora’s box is definitely filled with opportunity.