Former Fairfax exec predicts boom for Pandora radio

By By Paul McIntyre | 22 February 2013
Jane Huxley

Another day, another music streaming service. Or maybe not. Fairfax Media’s former chief executive for digital, Jane Huxley, has predicted Australia will follow the US market for the take-up of digital radio service Pandora, which now has 180 million registered users.

Australia is the first market outside the US to launch Pandora and Huxley said the soft launch in December has seen take-up ahead of the US compared with the same period.

She would not disclose figures – Pandora is a listed US company – but Pandora will appear in all Holden cars from later this year and come pre-loaded on dozens of electronic devices.

Pandora has 67 million ‘active users’ in the US but it is different to the avalanche of music streaming services hitting the local market such as Spotify and Telstra’s Mog.

Pandora operates under an Australian radio licence – the music service is free and downloaded via an app on desktops, mobiles and tablets. But unlike terrestrial radio stations, Pandora’s digital service uses an algorithm allowing users to type in an artist, track or genre and it will play music around that theme until it’s stopped by the user.

The service is advertising funded although Huxley, who is managing director of the Australian start-up, said that is some way off for this market. “It’s a massive brand in the US,” she said. “We’re just starting out here but 75% of all music played in Australia is done in a radio format.

“That’s the market we are in. We are not a streaming service. We operate under a radio licence but it’s highly personalised. There is a big factor of discovery in Pandora you don’t get on a terrestrial radio station.

"Pandora is very different from internet music streaming services in the market, because we are not an “on-demand” solution.  That’s a key differentiator for us.  It means our users don’t select playlists or repeat songs.  Pandora is a station-based service, where people start a station based on a favourite artist or genre, then Pandora creates the tailored stations for them, based on the user’s preferences.  The idea behind Pandora as a “lean back” personalised music service is for listeners to be able to sit back and listen to their favourite songs as well as discover new music, without having to “lean forward” and take time programming specific tracks into set playlists like they do with on-demand services.”

Huxley said she was unconcerned by the streaming services hitting this market because Pandora is free and fits with the “lean-back” preference people have for listening to music. She claimed despite the popularity of iTunes, Spotify and others, there had been little movement in the 75% share of music listening which radio takes.

“For 75% of listening, people just want to lean back. They just want the music to play. The rest is when we want to choose and play. That’s held fairly steady for the last couple of years.”

When Pandora’s Australian user base is big enough – Huxley wouldn’t say when or what the number is – the company will “aggressively launch” into selling commercial airtime.

“We will really aggressively chase down that audio spend. We are digitally delivered so the ability to target an audience is quite impressive. Major advertisers love it in the US.”

Ads can either be mobile display, video or audio – the latter Huxley said would be “really important”. Pandora will deliver just one minute of advertising for every hour of music played. The digital format will also allow users to respond to an advertiser’s call-to-action.

This article first appeared in the 22 February 2013 edition of AdNews, in print and on iPad. Click here to subscribe for more news, features and opinion.

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