clock menu more-arrow no yes mobile

Filed under:

Pandora and the Music Labels Finally Agree on Something: They're All Mad at Spotify and YouTube

Pandora says free, on-demand music isn't "sustainable."

Asa Mathat
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

For years, Pandora and the music business have been at odds: Music labels (and some musicians) have complained that Pandora doesn’t pay enough for the songs it plays; Pandora says the opposite.

Now they have finally found some common ground: Both of them are complaining about Spotify and YouTube, and the way those two services let you listen to anything you want, for as long as you want, without paying.

Pandora provides perpetually free music, too. But the difference is that its 78 million listeners can’t exactly listen to whatever they want. They only have a limited amount of input into what Pandora gives them, because Pandora is the Internet equivalent of a radio station. Spotify and YouTube, though, operate like a giant, cloud-based jukebox — they’ll play you whatever you ask for.

The music labels started up their offensive against Spotify earlier this year, and are still haggling with the company over licensing terms; the debate with YouTube has also ramped up, as the video service’s deals with the labels are about to expire.

Now Pandora has joined the labels’ side. Earlier this week, as Pandora was trying to tell investors not to worry about the launch of Apple Music, its executives pointed repeatedly to Spotify — which it called out by name — and YouTube — which it didn’t name — as problems for both Pandora and the music industry.

Which is why they kept saying that those services aren’t — or shouldn’t be — “sustainable” in the long run.

Here’s Pandora CEO Brian McAndrews during Thursday’s earnings call.:

“I think one of the challenges for the industry, I think, and for Spotify is how many of those teens are actually paying for it? And an on-demand model is meant to be paid for and subscribed to. And I think right now, there’s a lot of leaks in that, and that’s certainly what Apple has done intentionally with their trial, which it makes a lot of sense and people will try it out. But I think some other models like Spotify and others, there are some that have perpetual free alternatives, and that is going to attract some of the younger audience. Whether that’s sustainable or not is a very different question.”

And here’s CFO Mike Herring: “There’s a lot of noise in the marketplace right now with what was going on with essentially people having the opportunity to avail themselves to free on-demand services. I think that’s a question too, is to how sustainable that is and whether that continues. I think we had a big spot of that with the launch of Apple, where essentially millions and millions of people were availing themselves of that and that’s a three-month trial and that goes away.

… There are some other offerings out there where it’s easier to access on an ongoing basis, but it doesn’t seem to be economically sustainable, nor does that seem to be a good thing for the industry. Those leaky buckets will be plugged.”

Translation: Look, it would be bad if our free, not-on-demand service had to compete with free on-demand services forever. But those things are as bad for the music industry as they are for us, so we bet (we hope!) they’re going to go away.

We’ll see. For now, investors aren’t interested in what Pandora execs have to say: Shares tanked 35 percent the day after the call.

This article originally appeared on