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Spotify doesn't appear to be slowing Pandora's growth

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Research shows Pandora and Spotify are growing at traditional radio's expense

album record red2
album record red2

Pandora, the web's top radio service, continues to record big growth in the number of subscribers and hours of usage. At the same time, subscription service and rival Spotify has also reported spikes in the number of paying customers. The web players are likely benefitting at the expense of traditional radio, according to research firm NPD.

NPD said that a survey of 7,600 US respondents showed that in the fourth quarter last year, ad-supported and subscription-based online music services grabbed 23 percent of the average weekly music listening time for people between the ages of 13 and 35. That's up from 17 percent during the same period a year earlier. In comparison, NPD's data showed that listening at traditional radio broadcasts, which is now 24 percent, fell 2 percent. NPD's information on the online services is consistent with the numbers reported last week by the Recording Industry Association of America.

The more interesting question is whether Spotify is snatching away listeners from Pandora

It's been pretty clear for some time that online streaming would at minimum give traditional radio a run for its money. The more interesting question is whether Spotify is snatching away listeners from Pandora (full disclosure: Spotify stole me away). Pandora is an ad-supported radio service and Spotify is an on-demand subscription service but it's unlikely listeners need both. They are definitely competing for listeners. Last month, Spotify reported 24 million active users and said it had added 1 million paying subscribers in the first two months of the year. At this early stage, however, Pandora doesn't appear to be giving much ground to Spotify.

NPD released its fourth-quarter data yesterday, but this morning Pandora released internal user metrics for the month of March. Those appear to bolster NPD's general theme that listeners are flocking to the webcaster. Pandora said the number of active listeners for March totaled 69.5 million, a 36 percent increase from the 51.2 million active listeners it had during the same month in 2012. Pandora also said that its share of total US radio listening for the month was 8.05 percent, up from the 5.73 percent it posted a year ago.

Pandora doesn't appear to be giving much ground to Spotify

This may seem like a two-horse race, but the competition has just begun. Apple is still the dominant music distributor and music industry sources say iTunes is closing in on deals with the labels to launch a "Pandora-killer." Google and Beats by Dr. Dre, the makers of the popular headphones, are also reportedly working on their own subscription music services. It might be worth keeping close tabs on this sector as the landscape is likely to shift dramatically in coming months.