What Are The Benefits Pandora Brings To Different Customers ?

1) What are the benefits Pandora brings to different customers? What is the impact of Pandora on the value chain of the music industry?

When Pandora was first founded, it had used its capability to provide a back-end music recommendation engine for other companies like Best Buy and AOL.com. In 2004, the company changed its strategy radically to become a direct-to-consumer Internet radio service.

Pandora has the Music Genome Project which created a music library. It determines a song’s “musical DNA” that allow a user to find similar songs based on their favorite songs or artists inputted. It’s a very simple way to find the songs or artists that the consumers may be love.

Heard a song, Pandora encourage costumes give each song a “thumbs up” or “thumbs down” to further customize the listening experience.

By a technique known as “collaborative filtering”—Pandora could introduce consumers to new music and musicians based on song attributes.

If a user wanted to listen to a particular song heard on Pandora again, she could purchase it from an online store such as iTunes or Amazon.com. Pandora helped customers open up another window through which listeners could make the purchase.

At last, Pandora also offers listeners some ads which are really clean, no audio ads, no pornography, no cost-per-click ads.

The model of Pandora has the potential to transform the value chain of the music industry.

Traditionally, record labels owned the entire value network for music discovery, recording, and marketing/promotion. Costs in this recording industry were significant. End consumers have to buy album that cost not cheap. So it’s not easy to spread the songs. We called it “push” strategy.

However, Pandora’s goal was to create a new way for musicians and listeners to find each other. Artists could record their own music. It provides consumers a search platform where consumers can find their favorite songs to fulfill a particular need. We called it the “pull” strategy. This approach can not only allow consumers to find the songs they like to listen more quickly and cheaply, but also reduce the cost of the company for example no marketing costs, no manufacturing costs. Yet marketing and promotion was still owned by record labels.

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