Pandora’s founder and Chief Strategy Officer Tim Westergren surprised me the other day with a few quick facts about the mobile performance of his personalized Web radio service. I knew that Pandora was the most popular App Store app, with something like 2.7 million downloads thus far. But, I assumed many of those people were like me, occasional users. It turns out that 10% of all Pandora use now occurs off of the PC, and the “vast majority” of that is to the iPhone, he says. And that share shift is ongoing and occurring rapidly. Even more impressive, the average session time for the iPhone app is 100 minutes, almost two-thirds as long as a desktop session of three hours. Go figure. This is a business.
I am surprised by this because previous attempts to bring real music to phones have been so tortured. Using mobile phones as a music playback device always seemed to me more of an interesting theory than a practical reality. I tested both Verizon and Sprint’s music download services when they launched years ago, and the hurdles were immediately obvious. Storage, pricing, audio quality, music management, and even the headphone jacks had such serious issues it was hard to imagine why the carriers even launched these things. The gulf between the iPod experience and mobile seemed insurmountable.
But even when the infrastructure and the technology started catching up to our expectations, it still seemed a chore to bring the two platforms together. We now have more capable multimedia phones, including one, the iPhone, that actually has a full iPod built in.
But storage, quality and screen size are advancing across the board as well. Device convergence feels much more plausible than it did two years ago, even though I personally have not embraced it. I rarely use the iPod functionality on my iPhone. Web radio applications from Clear Channel, NPR, Pandora, Slacker, and last.fm all work quite well, but I tend to use each of them the same way I used the first music download services: as discovery devices. Verizon, Sprint and iTunes mobile music stores are very good ways to sample new music. I often find myself drilling into new and unfamiliar parts of their catalogs just to see what I am missing in the music scene. But I don’t yet turn on any one of the new Web radio apps just to let them play.
Apparently, I am behind the curve on this early adopter train. One consumer electronics industry analyst tells me it took him several months to pick up the habit, but now he is one of those regular iPhone Web radio listeners. Westergen says that the car is becoming one of the key links between IP music and out-of-home delivery. People are plugging their iPhones into the dashboard audio deck and running these services instead of standard iPod playlists or terrestrial radio. Ultimately in-dash IP radio could link to 4G cellular networks, circumventing terrestrial and satellite altogether.
Of course, all of this needs a compelling ad model that will work across platforms. Pandora’s display advertising is going very well with major brands, says Westergren. At some point, however, I imagine it will have to migrate to an in-stream model along the lines of Slacker radio, which inserts short audio spots after a set number of songs.
Doug Perlson, CEO, of TargetSpot, which serves ads into Slacker, Live360 and AOLRadio, says he has made the business case that running two to four minutes of audio ads an hour could make Web radio viable. Westergren feels that the model needs to make about 5 cents per person per hour to be successful, which is still several cents less an hour than terrestrial radio, he says. Whatever the model, mobilized IP radio is unlikely to overwhelm terrestrial radio’s deep roots in local content and advertisers.
But the mobile Web radio model has one core strength that few other mobile apps have: true personalization. The brilliance of Pandora, last.fm and Slacker on mobile is the seamless application of your online identity. The stations and preferences you construct on one platform accompany you everywhere. I think that seamlessness is the real selling point here. This is what ultimately will get me addicted to Web radio on the phone, I suspect. Making personalization truly portable has a very powerful effect. Opening one of these apps to see all the familiar channels I made elsewhere moves me that much closer to the “content cloud” experience. This is where it feels as if personal content is ever ready and available from multiple spigots we turn on anywhere.
Let’s see this portable personalization model move to weather, news and perhaps even gaming. Forget about extending your brand to mobile. What these music services do right is help extend more of me to mobile.