Roger Lynch joined internet radio company Pandora as chief executive almost a year ago at a time when the company’s wasn’t doing so great.
Now, things are looking a little better. On Thursday, the company announced a new tie-up with AT&T that will bring Pandora to the telecom company’s “&More” plan.
Lynch, whose digital bonafides include starting Sling TV, is spearheading Pandora’s battle for a slice of the $15 billion terrestrial radio ad business. He told NBCNews.com how he is trying to reverse user declines amid competition from Spotify and Apple Music. Lynch is set on growing partnerships beyond Pandora’s tie-ups with Snap, AT&T and T-Mobile and personalizing the business of podcasting.
Q: What made you join Pandora and what are its challenges?
A: I was intrigued by the scale of the business. Almost one in three adults in the U.S. uses Pandora every month. There was a lot of negative press around the time I was joining. It’s starting to turn now mainly because we are making some changes and the momentum of the business is starting to change. I thought it had real strength in digital audio advertising and I looked at that as a growth opportunity.
When I worked at Sling TV, it was let’s go kill cable and satellite and replace it with internet delivery and that’s what going to happen in radio too.
Q: What are you active uniques?
A: Seventy-two million last quarter. Last year the business saw year over year declines start to slow towards the end of the year.
Q: What do you attribute that to?
A: It was competition having an impact. It was more execution challenges. Think about how much growth has happened in music streaming services. Pandora has been surprisingly resilient. Job one was stopping that decline. We were able to do that quickly by the end of the first quarter. Hopefully, we will be back to user growth.
Q: How will you do that?
A: Pandora has huge capabilities in data science, and we use it well for our advertisers. That’s why we can generate well over a billion dollars in ad revenue. Pandora didn’t use it very effectively in its own marketing. That to me was one of the quick wins. We built a new marketing team, built new marketing datasets for our marketers, so that is starting to happen now.
Q: Marketers are looking for a hedge against big technology firms and mega-media mergers. Audio streaming is something that’s growing. How are home voice assistants changing that too?
A: Digital audio is one of the only formats not controlled by one of the FANG [Facebook, Apple, Netflix, Google] stocks. That to me is one of the opportunities. There is a lot of growth around new devices and new content. To be really good at creating anything around monetization around voice, you have to have the data and you have to be really good at audio.
Q: Let’s talk about rights deals with the three big music labels? They don’t like free. They’d rather have a piece of a subscription model.
A: We have a good relationship, which was not the case three to four years ago. That’s changed dramatically.
If we could all wave our wand and turn every listener into a paid customer, we would, but that’s not how consumers behave. and the labels are starting to understand that. They were and are enamored with a subscription, as are we. Subscription revenue grew 62 percent last quarter. But huge numbers of consumers aren’t going to be [subscribs] and it’s not about ability to pay. Lebron James said he still uses the ad-free version of Pandora. That’s an example of how it’s not a money issue. He just prefers not to pay. As Pandora gains share from radio, the labels benefit. They don’t get paid from them — they get paid from us. Pandora in 2016 did its first deals with labels and those were two to three-year deals.
Q: What are you doing in talk radio?
A: We have announced we’re moving into podcasts and spoken word in a much bigger way. Think about podcasts today. It’s about lists. It’s not really personalized. What Pandora has done for music, we’re going to do for podcasts. Use all the data science we have to promote content to you that we know will be relevant. In some ways, podcasts are still in the stone ages.
Q: Where do you see the future of the media business on a macro-level?
A: Given the AT&T ruling, I think you are going to see lots of changes. I was a bit surprised [the Department of Justice] tried to block that deal. The judge’s ruling really reflected that the dynamics have changed. It’s not about companies that produce content and companies that distribute. Its about big, vertically integrated tech companies. It remains to be seen. Someone will write a book about what [spurred] the initial investigation in the first place. How politically motivated was that?