Pandora’s $5-a-Month Streaming Play

The average American spends $67 a year on music purchase. Not a week. Not a month. That’s $67 a year.

This creates a big problem for all the streaming music services. By charging $10/month for a paid tier, that’s almost double what the average US citizen is willing to spend on music.

I know, I know. Ten bucks a month for unlimited instant access should scream “BARGAIN!” to everyone, but it doesn’t. The streaming industry clearly has a pricing problem that needs to be overcome if it’s going to attract the hundreds of millions of users it needs.

Enter Pandora and its new $5/month plan. Music Business Worldwide describes the service this way:

Pandora also confirmed today that it was revamping its $4.99-a-month service with offline features, and confirmed that its own Spotify rival, a $9.99-per-month fully interactive product, will launch later this year.

The new $4.99-per-month tier, Pandora Plus, replaces Pandora One, which turned over $55.1m in the three months to end of June – around a seventh of the money generated by its ad-funded tier in the same period.

The big difference is Plus offers more skips and replay abilities than its predecessor, as well as what Pandora calls ‘an ingenious solution for offline listening that elegantly handles issues with lost connectivity and cellular data usage’.

Canadians can shrug at this for now because Pandora still isn’t available to us. However, I keep hearing whispers that all say it’s coming.

Further coverage at TechCrunch. Music Industry Blog also explores what they call this “mid-tier offering.”