Due to the accessibility of Internet connections, Pandora Media Inc. is slowly gaining ground and is threatening the sales dominance of Sirius XM Radio Inc. in the U.S. Proving just how valuable the auto industry is to the two companies, their top officials appeared at Las Vegas this week to get in touch with automakers at the annual Consumer Electronics Show.
In about 70% of new vehicles, the satellite radios of Sirius XM are used. It gets most of its revenue from subscriptions and gets only a fraction from advertising dollars. This is a sharp contrast to streaming service Pandora, which gets majority of its revenue from advertising. It also runs a still-small subscription business.
Currently, Sirius XM is much bigger with nearly 24 million subscribers and over $3 billion in annual revenue. It had an average revenue of $12.14 per subscriber in the third quarter. On the other hand, Pandora has 60 million users. Of this number, around 1 million are paid subscribers. It is presently on course to generate $424 million in revenue this year.
However, Sirius faces the threat of music consumers moving to mobile devices. Since Sirius XM is present in new vehicles, it has an advantage over Pandora. However, Pandora has launched an impressive campaign with a move that enables listeners to easily access its service with wireless service. When interviewed, Pandora CEO Joe Kennedy said that Internet-enabled radio in the car has started already, and will “grow as a snowball” that will be small at first but will grow exponentially. No comment has been made by Sirius XM.