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Pandora’s Premium Subscription Service Stalls Just Months After Launch

Pandora’s premium on-demand music service seems to have lost virtually all of its momentum just months after launching to the public in March. The company added just about 150,000 paying users to its premium subscription tiers during the tree months ending June 30, it revealed as part of its Q2 financial filing Monday.

Altogether, Pandora now has 390,00 subscribers of its $9.99 on demand premium tier, CFO and acting CEO Naveen Chopra said during the company’s Q2 call Tuesday.

That’s a far cry from the growth that industry leaders like Spotify have seen in the same time period; the Swedish music service revealed earlier on Monday that it had added 10 million paying subscribers in the past four months, and now has 60 million paying customers.

Pandora ended the second quarter with 4.86 million paying subscribers. That is a 24 percent year-over-year increase. But it’s nonetheless a disappointing result, especially in light of the fact that Pandora had boasted of 1.3 million trials for its premium services in Q1. It now seems that most of those trial subscribers never stuck with the paid service.

Pandora did beat analyst expectations in Q2, bringing in $376.8 million in revenue for the second quarter, an increase of 10% year-over-year. The company recorded a net loss of $275.1 million for the quarter, with a significant part of it being a one-time write-down of goodwill due to the fact that Pandora sold its ticketing unit Ticketfly at a loss in June.

Pandora announced a $480 million investment from SiriusXM in early June. Two weeks later, it announced that founder and longtime CEO Tim Westergren was leaving the company. 

Pandora has in the past invested significant amounts of money into the development into its premium service, which included the acquisition of the music streaming startup Rdio in November of 2015. Earlier this year, Pandora boasted that as much as 30 percent of its about 77 million monthly listeners would be strong candidates to become paid premium subscribers.

Company executives have significantly shifted their rhetoric ever since the SiriusXM acquisition, instead focusing on primarily growing the company’s ad business. Chopra said Monday that the company had shifted some of its marketing money to address these new goals, but said that the company still views paid subscriptions as “critical” to attract new and younger listeners.

The company had previously communicated a goal of ending the year with 6 to 9 million paying subscribers. Chopra declined to give any guidance on paying subscribers Monday, and said that the focus was instead in growing Pandora’s overall audience. “The view now is that we need to develop as big of an audience as possible,” he said.

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