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Pandora’s move into music event ticketing

On October 7th Pandora announced that it was buying a live music ticketing company, Ticketfly, for $450 million. Part of the rationale was said to be to create “the most effective marketplace for connecting music makers and fans.”

How important is live music today?

Live music represents approximately 64% of the US music industry revenue. For some period of time it was possible for artists to survive on record/CD sales alone (a trend you could say the Beatles started in 1966), but the pendulum has swing back, so now almost all artists are relying on their live music revenue. That probably makes sense in the world of streaming today, where popular artists and hit songs make only pennies from streaming services. The number of megastars touring is key to the headline success of any given year, but most nights most venues don’t have Taylor Swift, and smaller bands on the rise need to find their audience to keep going.

Who goes to music concerts?

Unfortunately for promoters most people, even the self described “active concert goer,” do not actually go to very many gigs in a given year. Live Analytics (part of Ticketmaster) suggested that the average 25-45 year old goes to 3.6 concerts per year (compared to 200+ restaurant visits). ¬†Sports enthusiasts go to more events. Music has it tougher than sports for a variety of reasons, in particular no season tickets, and no predictable scheduling. You don’t know months in advance about a cool band’s one gig in town, which ends up coinciding with your anniversary dinner, but you do know the schedule of the Raiders home games.

Discovery: But I don’t know any of the current bands…

One of the advantages that Pandora can bring to the table is a well tested recommendation capability. It is not that hard for promotors to sell U2¬†or One Direction tickets, but Pandora knows the bands that are similar to the mega stars you like. “Listening to early Springsteen- check out The Hold Steady,” for example. They can show you the bands you don’t know well, who are coming to town, where you might find tickets a few days in advance, and would not have found out about otherwise.

Advertising: How do people find out about concerts?

It turns out that one of the most common ways for people to find out about great concerts is to hear their friends say “I went to this great gig last night.” IMG_20111114_130429This is perhaps one of the more subtle challenges a concert promoter faces. If you are trying to reach occasional purchasers of a product, who typically are not searching for “the next Surfer Blood gig,” (so search ads are inefficient) how do you do it? It used to be that fans looked at the back of the local newspaper (Village Voice, The Stranger etc) for gigs and maybe they saw something interesting. Those papers are dying, and local web services do not seem to be picking up that scenario. Pandora and similar services are reaching people at the time they are engaged — listening to the music for 20 hours a month — lots of opportunities to find a few bands playing locally that might fit a genre a customer is listening to.

Opportunity: Do all concerts sell out?

Live Nation, one of the US’s leading concert promoters, sees 40% of music tickets going unsold. They are working on CRM solutions and other customer engagement solutions, but unless you are in front of the potential concert goers a lot of the time, like a streaming service, it’s hard to keep people engaged in an activity they do once a quarter, at best.

Net- it makes complete sense for Pandora to be selling music tickets. It will be interesting to see how they integrate the ticketing solution into the core recommendations based experience over time, especially for their best customers, the Pandora One subscribers.