Ellen+Hutton

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Strategy report
TO: Proximity music team FROM: Ellen Hutton DATE: September 22, 2009 SUBJECT: Pandora strategy report

This is my Pandora strategy report. Pandora Media Inc. is a privately held online radio site that offers free service as well premium service for a fee. I believe it will be very successful with Gen-Y.


 * Profile**

Pandora’s service became available in 2005, but the company began in 2000 with the Music Genome Project, an effort by Will Glaser, Jon Kraft, and Tim Westergren to analyze and compile details of hundreds of thousands of songs and artists. Using this information, Pandora can generate stations based on a particular song or artist that includes other music with similar traits, such as melody, harmony, and lyrics.

Pandora generates revenue by:

Selling ad space for visual and audio advertisements Offering a $3 per month subscription for service without ads Capping free radio play at forty hours a month for each user and charging $0.99 for continued service for the rest of the month after that.


 * Competitive Landscape**

The power of suppliers is the main force driving the market place for all kinds of radio, including internet radio. Pandora must pay royalties on the music that they play, and their ability to continue operating and become profitable hinges on the amount of royalties the music industry demands.


 * Pandora’s Strategy**

Tim Westergren played a large role in legal disputes between the music industry and online radio sites over royalties. In 2007, a decision was made concerning the royalties online radio sites would have to pay, but the amount was so high that it would have forced many sites to shut down. Westergren and many others went into negotiations with the music industry and settled on a more reasonable amount this year that will allow Pandora to continue to operate and become profitable.

Pandora is superior to other internet radio sites because of its high level of customization. Users can create stations by choosing an artist they like, and then Pandora will play that artist and other music with similar traits, and these stations can be even further refined after that. Pandora also offers a mobile app for iPhones, Blackberries, and other smart phones.


 * Gen-Y Implications**

Since Gen-Y looks for any free way to listen to music, Pandora is perfect for them. The finely tuned customization features allow them to listen to exactly what they want to hear without any illegal downloading. The mobile app even allows Gen-Y to take their music on the go, and it is rated much higher than other music services apps. As a Pandora user and a member of Gen-Y, I believe these things put Pandora far ahead of the competitors for Gen-Y and will lead it to be extremely successful.


 * References**

//About Pandora//. (2009). Retrieved from Pandora website: [|__http://www.pandora.com/corporate/__]

//Frequently asked questions//. (2009). Retrieved October 4, 2009, from Pandora website: []

Layton, J. (n.d.). //How Pandora radio works//. Retrieved from []/pandora2.htm

//Pandora (music service)//. (2009, October 3). Retrieved October 4, 2009, from Wikipedia website: [|http://en.wikipedia.org/wiki/Pandora_(music_service])

Blog proposal
TO: Proximity music team FROM: Ellen Hutton SUBJECT: Blog post proposal DATE: Oct. 27

I propose that we do our Proximity blog post about internet radio mobile apps. This post can be used to attract new clients who may be unaware of the integration of internet radio and mobile phones. Before internet radio sites began coming out with mobile apps, users were limited to only listening when there was a computer around. The ability to take internet radio on the go makes it far more useful and has attracted large numbers of new users. Although these mobile apps are only available for smart phones, such as iPhone and Blackberries, the popularity of these devices is also rapidly growing. I recommend that we use [|Listening to Radio on the Web? That’s So Last Year] and [|Pandora Mobile] as sources.
 * Rationale**
 * Sources**

Report proposal
TO: Proximity Music Team FROM: Ellen Hutton DATE: Nov. 24, 2009 Subject: Proposal for report on Pandora

Pandora is emerging as the leader in online radio, and it is extremely popular among Gen-Y. While other online radio sites and other types of radio continue to struggle, Pandora is thriving and growing. I propose to write a report on how Pandora is positioning itself to become profitable within the next year in a market where most companies find it impossible to make money.


 * Need**

FM radio provides little variety, with some station keeping a rotation of as few as forty songs per week, and HD and satellite radios are costly, so Gen-Y has begun to turn to online radio as free or inexpensive way to listen to music. No other online radio site is growing as quickly as Pandora, and visual and audio advertisements in Pandora reach its millions of users not only through the website but also through its extremely popular mobile app.

Clients of Proximity who wish to target Gen-Y consumers need this report to understand that placing ads within Pandora will be much more effective than advertising on other online radio sites or on terrestrial radio.


 * Topics**

The proposed report, “Pandora: King of Internet Radio” will cover the following topics:

Features that make Pandora superior to other online radio sites; The current requirements for royalties from Pandora; Ad placement within the Pandora site; Why other forms of radio are failing The report will also include attachments comparing the financial standings of Pandora and several other online radio companies.


 * Sources**

The following items are sources for the report. I still need to find detailed information about Pandora’s and other radio companies’ finances.

//About Pandora//. (2009). Retrieved from Pandora website: []

This section of Pandora’s website gives general information about Pandora and the Music Genome Project.

Halverson, N. (2009, January 20). Pandora Ads Invasive Commercials. Retrieved from website: http://dailygeek.pressdemocrat.com/default.asp?item=2318782

Halverson reports on Pandora’s audio ads. They play between songs about every two hours and are targeted. Also included is information about royalties and Pandora’s 2008 revenue.

Kincaid, J. (2008, July 15). Pandora Usage Stats Prove It’s iPhone’s Killer App. Retrieved from http://www.techcrunch.com/2008/07/15/pandora-usage-stats-prove-its-iphones-killer-app/

Kincaid reports on the huge spike in new users and play on Pandora after the release of their iPhone app. He attributes Pandora’s success solely to this app. When the article was written Pandora’s app was the fourth most popular free app on itunes

Layton, J. (n.d.). //How Pandora radio works//. Retrieved from [] /pandora2.htm

Layton reviews the differences between Pandora’s free and paid subscriptions. She also goes in depth about the Music Genome Project, including some of the negative aspects of the way it works, and how Pandora draws revenue.

//Pandora (music service)//. (2009, October 3). Retrieved October 4, 2009, from Wikipedia website: [|http://en.wikipedia.org/wiki/Pandora_(music_service] )

Wikipedia gives information about Pandora’s limitations, and the royalties battles the company has faced. There is also some brief information about Pandora’s features, including the mobile app and Facebook app.

Team conference presentation proposal
//paste team conference presentation here//

Sales letter and report prospectus
December 5, 2009

Mr. Mike Nobel, Director of Marketing Motorola, Inc. Schaumburg, IL

Dear Mike:

I enjoyed talking with you yesterday at Proximity’s Next Generation Media seminar regarding Motorola’s need to promote its brand to Gen Y consumers. Enclosed you will find a prospectus for the report I mentioned describing Pandora Radio’s mobile app.

As you said yesterday, Motorola feels that it must establish brand identity with Gen Y in order to sell its products to that group as they become responsible for choosing and paying their own mobile phones and phone plans. I believe Proximity can work with you to devise an advertising strategy that includes placing ads with Pandora and promoting Motorola phones that can use Pandora’s mobile app to achieve that goal.

We can provide you with customized survey and focus group results to help shape Motorola’s image as a progressive, trendy company. Our faculty consultants can advise your sales team on how to position new products, and our production teams can make multi-platform ads that appeal to Gen Y. In addition, we have trained student marketers who can provide feedback on the power of your company’s advertisements. This feedback can lead to more effective ad placement to reach Gen Y.

I invite you and your staff to join us at Proximity’s Towson office for a special focus group session on Motorola’s Gen Y brand image. After that session, you can meet with members of our group to discuss how Proximity can help you meet your marketing goals.

Sincerely, Ellen Hutton Associate Media Analyst