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Digital Disruptors: Pandora and Ticketfly Bring Live Concerts Closer to Audiences

2/25/2017
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US-based Pandora, which leverages data to connect music lovers with their favourite music, is now connecting users to their favourite touring musicians. The popular US-based music streaming service teamed up with its ticket distribution subsidiary Ticketfly in 2016 to provide customers with notifications about live concerts with the options of purchasing tickets.

Pandora’s business model, which leverages data to connect music lovers with their favourite music, speaks to the trend of personalisation of services. The acquisition of Ticketfly, which was completed in October 2015 for US$450 million, takes the concept of personalisation a step further. Users will get location-based concert announcements depending on their musical preferences. Evidently, this will be a more individualised experience for users unlike mass emails that are tied to past concert bookings or location.

Photo by Euromonitor International

Source: www.ticketfly.com

With competition getting stiffer in the music streaming market, Pandora’s personalised service offering is really a strategy to differentiate itself in a crowded market. It is obvious that success of this strategy depends crucially on the company knowing its users and their musical preferences quite well. Pandora’s rich repository of musical information, including extensive analysis of varied musical genres and collection of titles, allows it to complement existing data on users and their favourite artists. In July 2016, the company and its ticket distribution subsidiary Ticketfly went one step further in this personalisation exercise by providing customers notifications about live concerts and the option of purchasing tickets. A strong data foundation and extensive insight into user behaviour informs Pandora’s shift into the live concert segment, which is expected to improve user satisfaction going ahead.

There is, of course, a financial side to the launch of personalised concert notifications and bookings. Pandora pays royalties on all the music that it plays and allows display, audio and video ads during specific periods during a listener hour. However, music lovers, typically, do not like to be interrupted during a musical session, which reduces the appeal of the ad revenue model. The live concert notification service is expected to augment revenues through convenience fees charged on every ticket purchased. Going ahead, this will help reduce the dependence on ad revenues by leveraging Ticketfly’s association with 1700 venue and event managers in North America. Users will be notified whenever a live concert of a preferred artist is organised at a nearby location, depending on their listening profile, along with convenient access to concert tickets.

It is easy to understand what Pandora is looking to achieve and statistics support their strategy. The market for digital purchases in the US online ticketed attractions and entertainment, which includes live concerts, stood at US$9.8 billion in 2016, with remote payments by personal computers (PCs) accounting for over half of total transactions. Remote payments in this industry are expected to grow by a heathy 17.5% over the period 2017-2021. The growth opportunities in this space are therefore, quite lucrative and Pandora’s acquisition of Ticketfly and launch of the notification service is an endorsement of this.

Competition will, however, increase as more players seek to wrest a greater share of the revenue pie. For instance, Spotify is the closest competitor because of the similarities it shares with Pandora in terms of its music streaming services and revenue model. Spotify has partnered Songkick, a live music company, which will allow users to find local concerts of their favourite artists and purchase tickets through a concert discovery feature on the former’s mobile app. This bears close resemblance to Pandora’s initiatives in the live concert segment. Going ahead, Pandora might also look to venture into foreign markets and tie-up with local online ticketing ventures to expand its user base and grow revenues.

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