6-19-2012
Consumers will soon be able to curate their own radio stations on yet another app. Up until now that feature was only available to Spotify subscribers who paid $10 per month. Spotify says in the next few days it will be made available to all users who have the app at no charge. The goal is to take market share away from Pandora. And this may come at a perfect time for Spotify. The mobile pop-up ads on Pandora have become unbearable.
Essentially every time you go to the Pandora app now, there is an ad. As soon as you launch the app there's an ad, if you fast forward a song there's an ad, if you change to another one of the curated stations there's an ad, when you thumbs up or down a song there's an ad. And, they do not disappear until you hit the X. It's become a major annoyance. (Note to Southwest Florida radio stations: I did hear an ad for the new CarMax store. Hope you're getting some of that business.)
Spotify's new free service will have audio ads. The company will use the free service to entice users to go ad-free with a paid subscription. $5-per-month cuts out ads on computers. $10-a-month allows users to choose songs ad-free on mobile devices. Like Pandora, users will be able to thumbs-up a song for playback later. Spotify has about three million paying subscribers globally. The company operates in 15 countries and began offering service in the U.S. last July.
It's important to note that while the pure play Internet radio companies figure out how they're going to make money -- and survive -- without annoying consumers by going too far with the ads, Clear Channel is sitting on the sidelines watching how this plays out. iHeartradio remains ad-free and also includes something the others will probably never have, a big selection of radio stations from across the country. Stations from Clear Channel to Cumulus to Greater Media and others.
Spotify's announcement comes after news that Songza passed Pandora as the most popular free music app for Apple devices. Unlike the free services of Pandora and Spotify, Songza doesn't use audio ads. It has display ads. The move has limited the company's revenue, but boosted its popularity.
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