Music Business

Does Pandora Have A “Fake Listener” Problem?

Pandora-new-logo-image-001By some estimates, more than two-thirds of listening on Pandora occurs at home or the office. So more than some music streamers, Pandora may suffer from “empty room syndrome.” In other words, the music is on, but no one is there to hear it.


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The idea that Pandora may have a "fake listener" problem started earlier this month when Nomura Instinet market analyst Anthony DiClemente wrote that the music streamer "plans to continue actively controlling listener hours (-5.6% YoY in 1Q to 5.21bn), as it optimizes timeouts for the least profitable audience cohorts.”

Pierre Bouvard, the Chief Insights Officer at broadcast radio group Cumulus Westwood One, reacted strongly to DiClemente's revelation.  "Pandora has no idea if anyone is actually listening," wrote Bouvard. "They can send a message: Are you still listening?”

"Optimize timeouts” means that Pandora sends an “Are you still listening?” message more often to certain ad demos than others, claims Bouvard. "They cannot make a lot of money from demos no one wants (Boomers), so they dial down that fake listening… Millennials? Whoa! Don’t dial down that fake listening! Pandora needs those impressions! Who cares if the ads play to an empty room?" Pandora_2016_logo wide

Is Pandora Cooking The Stats? 


Here are some stats from Pandora's early May report to investors:

Listener Hours Down 310 Million - Total listener hours were 5.21 billion for the first quarter of 2017, compared to 5.52 billion for the same period of the prior year. 

Active Listeners Down 2.7 Million - Active listeners were 76.7 million at the end of the first quarter of 2017, compared to 79.4 million for the same period of the prior year.

Pandora admits that it is experiencing a downturn at the same time that Spotify and others are growing. The music streamer is also pushing to find a buyer while working to keep its stock price from collapsing.

Still it would be unfair to call Bouvard's hypothesis a fact. So the real question may not be whether Pandora has a "fake" listener" problem, but rather is their downturn in listening even steeper than we think. 

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