Pandora faces a scale problem very similar to that of Free Mobile in France, which is disrupting the French mobile market by attacking retail prices, but has to keep scaling paying customers at a high rate to reach the breakeven point.
Where Free Mobile's problem is the rate at which is can keep growing its subscriber base, Pandora's problem is to scale ad revenue to keep pace with its rate of subscriber additions.
Pandora already is probably one of the five biggest mobile ad businesses in the United States, some would argue.
Pandora mobile ad revenue has increased by 86 percent to $60 million in its fiscal second quarter of 2013. Total revenues were $101 million. Pandora also saw a 112 percent increase in the number of ads delivered.
But the average price per ad declined 27 percent. Both Pandora and Free Mobile have common business problems, namely the task of reaching scale in its operations and, at the same time, matching that scale to revenue growth and operating costs.
Monday, September 10, 2012
Pandora Faces Monetization Issues
Gary Kim has been a digital infra analyst and journalist for more than 30 years, covering the business impact of technology, pre- and post-internet. He sees a similar evolution coming with AI. General-purpose technologies do not come along very often, but when they do, they change life, economies and industries.
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