Case Memo: Pandora

Case Memo: Pandora

To: The Chief Executive Officer, C.E.O

From: Your name

Date: 16/3/2020

Subject: Case Memo: Pandora

Introduction

This memo recommends a robust mode of doing business or, most preferably, a robust business management strategy that shall substantially enable Pandora Internet Radio to remain competitive and profitable in its market niche regardless of the uncertain business condition. The implementation of this memo shall most likely take place within a week of approval. Substantially, the company is expected to grow its revenue and retain its profitability as well as reduce its cost of operation.

Background

Over the last ten years, the music industry has significantly been affected by a gradual reduction in various traditional record stores and a reduction in the sales of conventional albums. After the onset of 2000, the sale of digital music greatly surpassed the sale of physical music. This factor has substantially resulted in the threats and opportunities of the music industry. As more persons consume music via different mobile and online platforms, such streaming companies as Pandora continually gain attention, and the significance of sharing music online becomes more fundamental than ever. Being a music streaming company, Pandora faces a substantial increase in the cost of royalty structure and the cost of content acquisition with each added listener hour.

Issue and Analysis

The digital revolution witnessed in the music industry has made the cost of music to be free (Stanftennagel & Vincelette, 2014). This issue has forced streaming companies like Pandora, to try other methods of generating revenue, such as sponsorships, advertising, and subscriptions. As a digital subscription radio, Pandora has had to overcome a myriad of fundamental regulatory problems. These individual regulatory challenges have been brought about by the action of the National Association Broadcasters drumming up support for traditional analog broadcasters. Pandora, as a music streaming company, faces enormous competition from a wide variety of significant technical players.

The competition that Pandora faces is mostly based on staying relevant in the music-streaming movement as well as generating revenue. Giant organizations such as Apple, Microsoft, and Spotify have recently infiltrated the music streaming market, and owing to their resource muscle and the package they are offering, they pose a substantial competition to Pandora (Stanftennagel & Vincelette, 2014). Based on the value chain analysis, please refer to appendix A, the royalty structure, and the associated cost of acquiring content is solely responsible for the reduced revenue that the company is generating and the primary reason for the increased competition. Even though this is so, Pandora has significantly benefited from the shift from traditional record stores to the digital music platform.

Recommendations

The current challenge that Pandora Internet Radio is facing can be remedied by strengthening its brand recognition and gain visibility amongst other solutions offering to partner with successful players in the industry such as Verizon. The company can also invest more in bettering its advertisement strategies and criteria, as this is one of the best ways to monetize the number of listening hours in the radio and music streaming industry. Additionally, the company can offer offline listening to its clientele to beat the existing competition in terms of competition.

Basis of Recommendation

Pandora Internet Radio requires focusing on the recommendations as mentioned earlier, given that the proposals shall directly influence the profitability of the company and significantly help the organization to remain competitive and relevant in the music-streaming industry. Most importantly, focusing on such a strategy as offering offline music listening services shall put the company substantially ahead in terms of the competitive advantage given that such a service shall attract more listeners per hour and subscribers. Making use of such recommendations shall ensure the long-term sustainability of the organization in music streaming.

Discussion

Pandora has a plethora of options to choose from if, indeed, it is to remain competitive in the music streaming industry and generate substantial revenue fit for ensuring its-long term productivity. In addition to other choices to select from, the company has the option of developing the sound quality of its music to attract more clientele and subscribers. A majority of music streaming services and internet radio services do not invest much in the sound quality of their music. This is one of the most significant opportunities that Pandora can make use of to change the existing face of competition. Given that in the music streaming industry, royalty fees are the primary source of cost, it would be prudent for Pandora to venture into other related areas such as gaming, video, and merchandise as such areas have the potential of expanding the company’s revenue substantially.

Next Steps

For the organization, a majority of the recommendations shall have to be implemented effectively. In contrast, a great deal of such proposals will require more time, given that they need more processes to implement. For Pandora, the implementation of all of the recommended strategies shall effectively be overseen by the company’s C.E.O and the company’s board members. For starters, Pandora’s Chief Executive officer can arrange for a meeting that can enable all members to share their ideas on how to effectively implement a long lasting solution to the issue of competition and profitability. The meeting should be scheduled three days from today as this shall give room for more ideas and implementations.

References

Pandora Case Study — Isabelle Ringnes (2014). Isabelle Ringnes. https://www.isabellekringnes.com/pandora-case-study

Stanftennagel, G., & Vincelette, J. (2014). Pandora internet radio (2014): Just press play. General Issues in Strategic Management. file:///C:/Users/Dell/Downloads/pandora-case%20(2).pdf

Appendices

Exhibit1: Value Chain Analysis

Pandora Internet Radio, Revenue, and Loss

 Pandora Case Study — Isabelle Ringnes (2014). Isabelle Ringnes. https://www.isabellekringnes.com/pandora-case-study