Pandora Sub Churn Likely to Mirror That of Other Streaming Services, Says Analyst

Macquarie Securities is modeling Pandora paid subscription churn for 2017 at 4-5 percent, parallel to other paid music streaming services, analyst Amy Yong wrote investors Friday. The analyst is projecting 2017 paid subscriptions for Pandora’s $4.99-per-month Plus service at 4.8 million and at 1.1 million for its $9.99-per-month Premium service that launches this month. That’s at the low end of Pandora’s expectations of 6 million to 9 million paid subscribers. Some 30 million of competitor Spotify’s 100 million customers are paid subscribers, Yong noted. Citing new video ad offerings and the Ticketfly segment, Yong said Pandora “does not need to be category king to succeed and will rely on the strength of its product vs competing on price.” Marketing techniques for Premium will include exclusivity through an invite-only period and free trials ranging from seven to 30 days, she said. Macquarie is modeling $58 million in subscription revenue for the quarter and $319 million for the year, reflecting the late Q1 launch of Premium. The company rated Pandora an “outperform,” saying recently named Chief Financial Officer Naveen Chopra (see 1702270064) “could bring financial discipline and a fresh perspective.”