Pandora’s upcoming Spotify killer has one major problem

Parker Hall
Pandora’s upcoming Spotify killer has one major problem
Pandora has signed key licensing deals with two of the three biggest labels, and numerous indie labels, but still needs to ink a deal with Warner Music Group for a successful on-demand option.

Pandora is gearing up for the launch of it’s $10-per-month on-demand streaming option, announcing today that it had secured licensing deals with Universal Music, Sony Music, indie record label trade association Merlin, and more than 30 other labels and distributors.

But there is still a big hole in the internet radio company’s play for world domination: Warner Music Group, one of the three largest record labels in the world, has yet to ink a licensing deal. And while, according to Billboard, the two companies are close to reaching an agreement, Warner could also use the fact that it is the last big hold-up to get better terms.

Related: Apple Music’s iOS 10 update includes new personalized playlists to compete with Spotify

Pandora has been working to create its own on-demand streaming service for some time now, with CEO Tim Westergren reportedly looking to beat Amazon’s upcoming on-demand streaming service to market.

The press release from Pandora seemed premature to many industry insiders, seeing as it is largely accepted that no fully featured service would be popular without Warner Music on board. The label’s list of major artists is massive, and includes releases from international superstars such as Coldplay, The Red Hot Chili Peppers, Ed Sheeran, Metallica, and many more.

Still, the streaming radio king will almost certainly work out a licensing agreement with Warner eventually; The label is by no means anti-streaming, with services like Apple Music, Spotify, and Soundcloud currently licensing Warner-owned material.

When it finally secures its Warner deal, Pandora is expected to launch two subscription options. The first will be an expanded version of its current $5-per-month option called Pandora One, which will continue to remove ads and up the number of songs that users can skip to six songs per hour, as well as adding the ability to store playlists online. The second will be its $10-per-month on-demand option.

The on-demand service will be an entirely new offering from the company, but will probably resemble current market offerings from Apple Music, Tidal, and Spotify.

Pandora currently boasts 78 million users, and is looking to convert a significant portion of them to on-demand streaming when it launches its new service. With a conversion rate of just 10 percent, Pandora would instantly become the third-largest on-demand streaming service on earth.

The release date for the upcoming service has yet to be announced.