Pandora Internet Radio Company Technology Strategy

Is Pandora an internet radio company serving 75 million customers or a company of technologists developing flawless algorithms or a company of music loving people? The answer is all of the above.

Pandora can be considered as a disruptive innovation to all those traditional radio listeners. Besides the advantage of a disruptive innovator, Pandora also got the timing advantage. It entered the market of internet radio when every communication media was enjoying the upsurge of internet. Internet radio was booming but Pandora didn't quite stop at that. It competed against the third dimension of non-consumption. Pandora not only increased the value of internet radio to their existing customers but also successfully converted a huge base of non-customers to loyal Pandora customers by going mobile. In 2008, with the launch of Pandora's new iPhone app, Pandora was able to hit critical mass. Since then, Pandora has been integrated in the entertainment system of a very long list of new automobiles. Pandora's "anytime anywhere" mantra (Gray) has successfully converted the non-customers, the folks riding in the cars and listening to traditional radio, to loyal Pandora customers by enabling them to listen to music of their own choice and that too, free.

Pandora's technology strategy has been that of early adoption. But it didn't wait reactively for the market to "take-off". It rather pushed its product to cross the chasm (shane). It is not merely a music search engine. It has combined technology with human intelligence. Pandora's music analysts categorise each song using 400 plus attributes and the "Music Genome" algorithm (Freedman) matches the user with his perfect song list using those attributes. So far, it seems that the technology part is going great for Pandora. One other that Pandora has done succesfully is agile planning and agile development (Freedman). With a very short product cycle and perhaps shorter process cycle, Pandora has been able to deliver to its customers needs in a fast evolving industry space. Today Pandora stands for good free music, huge user base and multiple modes of delivery.

Going forward,Pandora's technology strategy should be that of differentiation. Between Porter's two dimensions, it has so far chosen to be on the side of low- cost. But it is not able to monetize its services and its customer base and on top of that, it is paying high royalty to the artists. Stated below are few recommendations, using which Pandora can stay successful in future:

1) Change its revenue gerenrating model. For example, it may shift to subscription based service or it may jumpstart its marketing message by pushing for more ad revenue.

2) Lobby Congress for equality of royalty sharing for different digital radio formats.

3) Identify differentation factor , in terms of its product