SiriusXM has recently acquired Pandora, but it’s still awaiting stockholder approval. If approved, this would create an audio behemoth with more than 100 million monthly listeners. The $3.5 billion acquisition will make it interesting for other companies like Apple, Spotify, and Amazon as they compete for connected car dashboard supremacy. Because in-car listening is what everyone wants, this acquisition creates a formidable power. This doesn’t just have an impact on the streaming world. It also impacts the larger radio industry. Overall, the radio industry has seen its impact and influence diminished with the rise of on-demand streaming services over the last couple of years. I hate to say it, but does anyone listen to the radio any more – other than my parents?
Having this kind of subscription base is very valuable for any company. This acquisition gives SiriusXM reach well beyond just vehicles as it now opens up listening to this service in your home and on your phone – which is where Pandora flourishes. That said, comparing SiriusXM to services like Spotify or Apple Music, isn’t a fair comparison. In fact, we’re not comparing apples to apples. Which makes this merger a bit of a two-headed beast. Where one head is in the digital streaming world and the other is in the broadcasting industry.
So why do it? One big reason for SiriusXM’s move on this front is because it can offer a free, commercial-supported alternative. But is that what people really want? Do we want more advertisements? Spotify has claimed that its ad-supported (free) platform has actually enticed users to subscribe to their paid service. I am one of those subscribers. I don’t necessarily mind advertisements on occasion, but if it’s interrupting my flow while I’m trying to get ready for work in the morning, I am going to look for an alternative.
But this really isn’t news. The acquisition is, but Pandora has been a potential acquisition target for at least two years. In 2016, a continued slide in its share price prompted it to look for possible buyers, and SiriusXM has been in the running to buy Pandora since it injected $480 million of funding into the company last year. The investment allowed Pandora to cover basic expenses, and also spurred a shake-up in the executive ranks that brought in Roger Lynch, Pandora’s fourth chief executive in four years.
What does this mean, exactly? Well, all it will do is enable Sirius to attempt to keep listeners who don’t want to pay for music, by diverting them towards Pandora’s free ad-based model. The trouble with Sirius is that it costs a lot of money, and as noted above, its only good for your vehicle. Sure, you can use it in your home, but you have to buy the devices to make it happen. So this really isn’t about combining the two organizations to bring us some kind of revolutionary way to listen to music. No, this is about Sirius trying to stay relevant in a world that is raging against it.