New Study Shows Young People Abandoning Pandora at an Alarming Rate

New Study Shows Young People Abandoning Pandora at Alarming Rate

Pandora CEO (and co-founder) Tim Westergren (l); interviewed by SF MusicTech Summit’s Brian Zisk (r) (Corey Denis (CC by 2.0))

Pandora still tops the list of music streaming services.  But will fading numbers spell longer-term problems at the company?

After teasing users for months, Pandora has finally launched its premium service.  But the move is coming against a troubled backdrop.  The company recently posted bleak financial reports, and SiriusXM pulled out of advanced buyout talks after deeming the price too high.

The company remains unable to convert its roughly 80 million users into a profitable revenue stream.  According to their financial reports, Pandora has lost an astounding $512 million in the past two years.

Now, a new survey underscores the streamer’s weakening position in the streaming market.

Between January and February of this year, Edison Research conducted a national telephone survey.  They interviewed 2,000 people aged 12 and older using random digit dialing techniques.  Per the results — and in good news for the company — Pandora remains the most popular streaming service by a wide margin.

Overall usage.

In total, 32% of people listened to the service in the last month.  Spotify took second place with 18%, and iHeartRadio came in third with 13%.

(Tidal didn’t rank at all in the survey).

Edison Research

Brand Awareness.

Pandora also has the strongest audio brand awareness with a whopping 86%.  iHeartRadio came in second with 71%, and Spotify third with 62%.

Edison Research

Yet, digging deeper, the survey shows strong red flags for the financial health of the company in the long-run.  Among the next generation of consumers, aged 12 to 24, only 30% listened to the streaming service in the past week (at the time of the survey). This represents a 3% drop from 2016, and a severe 15% dive from just two years ago.

Spotify may have picked up these listeners.  In 2015, only 17% of listeners in this age group listened to the Swedish streamer.  The number jumped 8% last year, and grew more than double the original amount this year.

iHeartRadio and Apple Music saw minimal growth in the past three years.

Edison Research

But what about the current generation of consumers during the same time period?  While not as dramatic as listeners aged 12 to 24, Pandora still suffered a noticeable drop.  Among people aged 25 to 54, the service still came in as the most listened to service with 29%.  While undeniably strong, this number shows a 3% decline over last year, and a 4% decline from 2015.

Meanwhile, Spotify keeps gaining as the company reached 14%, double 2015’s numbers.  iHeartRadio and Apple Music didn’t fare well in this age group.  Both companies saw dramatic 6% decline in surveyed listeners for the past week.

Edison Research

Among the 25-54 age group for the past month, Pandora’s numbers stagnated.  The popular streamer maintained its position at 39%, tying last year’s numbers.

Yet, Spotify slowly keeps creeping up on the streaming leader.

Edison Research

Broader Look.

The overall numbers show warning signs for the company’s health in the long-term.  As the company rolls out its premium service, Pandora has yet to unlock the secret to attracting and keeping new listeners.

But do the numbers indicate a bleak future for the company?  In the survey, more and more users appear to be abandoning the service in favor of Spotify.  When asked about the most used audio brand, Pandora stood strong in first place with 40%.  Yet, these numbers show an 8% decline over last year, and a strong 14% drop from 2015.

In turn, only 10% of surveyed users reported using Spotify in 2015.  Yet, the number saw a 4% increase in 2016, and a whopping 11% over 2015.

Edison Research

Edison Research’s survey goes on to show interesting information about podcasts and music usage in general.  You can read the entire survey here.

9 Responses

  1. Anonymous

    Why is it alarming for young people to abandon a service with one of the worst ARPUs for artists in the biz?

    Alternately, alarming to who? Businessmen?

  2. Remi Swierczek

    Tim, Brian and their chief investor Larry Marcus are society of self adoration!

    The reality: only YouTube/VEVO and streamers are bigger parasites of almost dead music business. Music is bigger than digital ads – $300B music business by 2030 is no brainer providing we will start direct monetization!

    Using music as a FERTILIZER on advertising and streaming farms is a immoral INSANITY. Google, Apple, Amazon, Spotify or Pandora should start respect music, musicians and own bottom line.

  3. partyfavorz.com

    So you basically create stories from my comments but then block my posts so people don’t know where they come from. Lazy journalism.

  4. music stowaway

    Pandora, tried the web player for the first time yesterday..
    Didn’t find the repertoire as extensive as Apple Music or Spotify also some of the artists/bands I entered into the search field were not found.. The big international hits are there of course but not all the independent artists/bands that are found on Apple Music, Spotify and iTunes.

    This may be an issue with aggregators who distribute content to the digital stores and streaming sites.. not sure..

    Would I become a paid premium member? No ..
    I am a free Spotify web player user and occasionally I buy music from iTunes or Beatport.

    For my own economy it’s better value to buy music from iTunes or Beatport than pay a monthly subscription fee of $10 – $12.

    Never the less I wish them well..

  5. Matt Bunsen

    If they cant turn a profit with 80 million users then its hopeless… streaming will never make money for anyone and thats huge bummer…

  6. Anonymous

    Pandora is still my favorite discovery tool, and there is a lot of appeal in having Pandora’s discovery and my playlists all in one place, rather than having to switch between Pandora and Spotify. That said, I prefer to manage my playlists using my computer, rather than my phone, so I’ll probably wait until the desktop/web app version is available.