Despite being one of the first companies to enter the music streaming market, Pandora isn’t doing all that well. Pandora CEO Brian McAndrews even dismissed Apple Music in a recent interview, claiming that it wasn’t a threat, but considering how Apple Music already has 6.5 million paying subscribers while Pandora had a loss of $85.9 million last quarter, that might have just been tough talk. McAndrews also questioned the long-term viability of Spotify’s streaming model, which allows users to choose whatever song they want to listen to, something that Pandora doesn’t do.
The war of the music streaming services is heating up, and Pandora is shaping up to be a big loser once the dust settles. Two days after Apple CEO Tim Cook announced that Apple Music has 6.5 million paid subscribers and 8.5 million users on a free three-month trial, Pandora revealed a loss of $85.9 million in the third quarter of the year. Pandora’s value proposition is in question as Apple Music surges and Spotify maintains a paying user base of about 20 million. While Pandora remains a radio streaming service that does not give users the ability to choose specific songs or albums to play, competitors like Apple Music, Spotify, and Google Play Music give users that freedom, in various forms. Pandora’s defense of their viability in the face of the ever-growing crop of competitors is to question the long-term sustainability of those on-demand models. On the third-quarter earnings call, Pandora CEO Brian McAndrews questioned the sustainability of Spotify in particular, given that its free on-demand, ad-serving business model is rubbing music labels the wrong way. He said he thinks models like Spotify offering perpetually free music streaming will attract younger audiences, but “Whether that’s sustainable or not is a very different question.”