On an investor's conference call Thursday, Pandora Chief Financial Officer Mike Herring opened up about the company's plans for future royalty rates, why Rdio failed and took shots at Apple Music saying, "Steve Jobs eviscerated the music industry."
He was candid during the session saying no one subscribes to Apple Music by choice even though it's automatically installed on millions of phones. Apple Music currently boasts 15 million active users, 6.5 million of which are paid subscribers. Those numbers are much smaller than Pandora's 79 million active users.
Herring said it's been a rough 15 years for the music industry ever since the launch of iTunes, in which the download was suppose to save the industry. Now analysts say music streaming is suppose to save it, but Herring seems to think it will be something that drives more engagement overall, which might be why the company purchased Ticketfly earlier this year.
Pandora is the veteran company in the ongoing music streaming wars having started back in 2000 as an Internet radio streaming service. It's important to make that distinction from Spotify, which lets free tier users choose the songs they want to play, because that difference has major implications for the royalty rates each has to pay.
As Billboard reports, Pandora wants to lower its rate from 0.14 cents to 0.11 cents per stream, while the royalty collection and distribution service SoundExchange wants to raise that rate to 0.25 cents per stream.
Herring says a higher rate could prohibit others from entering the competitive field of music streaming, citing the now defunct Rdio as an example, which the company bought core pieces of as it went bankrupt earlier this year.
"Costs are so prohibitive that if you are not really amazing at it you go out of business. That's what happened to Rdio, right?" Herring said on the conference call. "A beautiful product, a great product, but the business is just too hard. The costs are just too high."
No official word on what Pandora will do with its new assets in Rdio, but he did say on demand functionality will be added as well as live concert streaming options.
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