Pandora says Apple Music contributed to 1.3M listener decline in Q3

Posted:
in General Discussion edited November 2015
Pandora CEO Brian McAndrews on Friday said he expects listenership to rebound after seeing Apple Music contribute to a decline of 1.3 million active users for the third quarter of 2015, noting the launch of Apple's streaming service is having roughly the same impact as that of iTunes Radio in 2013.




In its quarterly earnings report, Pandora noted a year-over-year increase of 1.6 million active listeners, bringing total users up to 78.1 million for the quarter. That number, while massive, represents a 1.6 percent sequential decline that McAndrews blames in part on Apple Music.

"This was obviously a unique quarter in the streaming music business," McAndrews said, according to a transcript of today's earnings conference call. "The June 30, launch of Apple Music with its 3-month free trial, as well as significant category spending and trial offers across multiple players, brought increased focus to the broader on-demand category during this period."

In spite of competition from Spotify, statistics show Pandora listenership trending upward over the past few quarters, with spikes during the holidays. The September quarter represents an unseasonal decline for the streaming service. Anticipating the effect Apple Music would have on Pandora's numbers, McAndrews last quarter warned of potential negative growth. The impact was in line with expectations, he said, characterizing the decline as short-term.

"I am pleased to say that, given the scale of press and consumer attention on this launch, the impact on our active users and listening hours was muted and was, in fact, consistent with what we experienced during the launch of Apple's radio service in 2013," he said.

The statements stand in contrast to an early evaluation of Apple Music in July, when McAndrews said the service had no material impact on Pandora one month in. Days later, Apple reported 10 million users had signed up to try out the new streaming product.

Uptake has expectedly slowed for Apple Music as the initial hype from June wanes. Apple CEO Tim Cook on Monday said the service now sits at over 15 million users, but more importantly boasts 6.5 million paying subscribers. That is a huge number compared to Pandora's audience, which largely opts to stream ad-supported content instead of ponying up for premium tier access.

For the quarter, Pandora notched $311.6 million in revenue, a 30 percent increase year over year, but posted losses of about $85.9 million due in large part to a recent settlement payout to record companies over content licensing agreements.

Comments

  • Reply 1 of 13

    Too early to make a declaration either way; the free AM trial will have thrown these numbers off. Long term is what matters.

  • Reply 2 of 13
    This could be declared. 6.5 Million paying customers X $30 for a Quarter = $195M. That seems like a fine start to me. How long has Pandora been in the streaming business? They have $311M revenue. Apple will catch up.

    My bad memory made me think it was $10 a month, $30 a quarter. So it's actually about $36 a quarter. I haven't allowed for family passes. But at best that's $234M revenue per quarter.
  • Reply 3 of 13
    fallenjtfallenjt Posts: 4,028member

    but but Pandora said it wouldn't be impacted...No?

  • Reply 4 of 13
    gatorguygatorguy Posts: 23,005member
    fallenjt wrote: »
    but but Pandora said it wouldn't be impacted...No?

    Quote from June:
    "In terms of Apple Music, of course it launched at the end of June, so there was no impact yet. Going forward, we (Pandora) feel really good about our trajectory and competitive position. With any big launch like this and the noise in the marketplace, there could be some users that experiment with it and there could be some short term impact… But we don’t believe that there will be any long-term impact."
  • Reply 5 of 13
    Quote:

    Originally Posted by TheWhiteFalcon View Post

     

    Too early to make a declaration either way; the free AM trial will have thrown these numbers off. Long term is what matters.


     

     

    Quote:

    Originally Posted by Gatorguy View Post



    Quote from June:

    "In terms of Apple Music, of course it launched at the end of June, so there was no impact yet. Going forward, we (Pandora) feel really good about our trajectory and competitive position. With any big launch like this and the noise in the marketplace, there could be some users that experiment with it and there could be some short term impact… But we don’t believe that there will be any long-term impact."

    The stock is off 35% after-hours, which certainly seems like much more than a reaction to "...some short-term impact."

  • Reply 6 of 13
    matrix07matrix07 Posts: 1,993member
    Quote:
    Originally Posted by Douglas Bailey View Post



    This could be declared. 6.5 Million paying customers X $30 for a Quarter = $195M. That seems like a fine start to me.

    I don't understand this math. Where is $30 coming from?

     

    Edit: Ah.. I see. Revenue for Apple Music for a quarter.

  • Reply 7 of 13
    Quote:

    Originally Posted by matrix07 View Post

     
    Quote:
    Originally Posted by Douglas Bailey View Post



    This could be declared. 6.5 Million paying customers X $30 for a Quarter = $195M. That seems like a fine start to me.

    I don't understand this math. Where is $30 coming from?


    I think he means $10/month, therefore, $30/quarter?

  • Reply 8 of 13
    Yeah but I was out by $2 a month. Have edited my post.
  • Reply 9 of 13
    aricbaricb Posts: 27member

    I tried Spotify and found it to be complicated and inconsistent. And of course iTunes has become an overly complicated program that isn't easy to use. I'm not interested in needing a college degree just to play some music for a half hour or so.

     

    I prefer Pandora because it's consistent, fast, and super easy.

  • Reply 10 of 13
    idreyidrey Posts: 647member
    So, does this means that Pandora is going to file a lawsuit
    Agains Apple, because they are costing them money?
    They might as well everybody else is trying :/
  • Reply 11 of 13

    Pandora was talking tough about a year ago when asked about apple streaming music service.   I guess you can only coverup for so long!

  • Reply 12 of 13
    calicali Posts: 3,494member
    [IMG]http://forums.appleinsider.com/content/type/61/id/64666/width/200/height/400[/IMG]

    Can't believe I furgot to post this.

    People say Iovine is a bad speaker but here we have the competition using his phrases.

    Will they trademark this phrase?
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