Can IPhone music sales save Pandora?
I don’t think so. Techcrunch has a recent article about Pandora’s IPhone app rapidly increasing total song downloads. Supposedly, Pandora is selling around 1 million downloads per month. But here’s the problem: Pandora only gets 5% of the total sales revenue (basically just $0.05 per song). So that’s $50,000 per month, or $600,000 per year. This is clearly not enough to sustain a business like Pandora over the long run, even if these numbers do grow.
A better solution is to simply charge for the IPhone app. Sell it for five or ten dollars, and get some money upfront. Many other music streaming sites are suffering. If Pandora starts running out of cash as well, I wouldn’t be surprised if they gave this model a try.
Pandora also recently raised $35 MM to help tide them through tough times. They are definitely positioned for growth now.
Archive for August, 2009
Can IPhone Music Sales Save Pandora?
Wednesday, August 26th, 2009MySpace Acquisition of Ilike
Tuesday, August 18th, 2009I’ve been MIA for around 2 months working on other projects, but the Musimuse blog is now back! I’ll be updating about once a week, so please touch base occasionally to see what’s up in the wonderful world of music.
Techcrunch recently reported that MySpace acquired Ilike, the music streaming service. I think there are a few very interesting things to note here:
1) Ilike is immensely popular, yet the acquisition price was reportedly only $20 million or so. Considering that Venture Capitalists put in $16.5 million, this is a really crappy return. So why did they sell….?
2) Why did they sell to Myspace? Facebook is obviously a natural option, given that the platform runs on facebook. I don’t really understand why facebook would continue to support a popular service now owned by one of its biggest competitors.
Something very unusual is going on here. Last.fm sold a few years back for $280 million. Now, I understand these are bad economic times, but this still makes very little sense to me on a number of levels. Would love to hear thoughts.