Pandora Unveils New Premium Streaming Service

By Evan Niu, CFA Markets Fool.com

Image source: Getty Images.

Continue Reading Below

What happened

Internet radio service Pandora Media (NYSE: P) has now unveiled its rumored on-demand streaming service, dubbed Pandora Premium. This is different from Pandora's existing Pandora Plus service, which merely removed ads from its online radio service for $5 per month. Premium will cost $10 per month and grant access to a large catalog of music to stream on-demand, and users will be able to save songs for offline playback. There are also no ads for Pandora Premium.

Video source: Pandora.

The service will launch in early 2017.

Continue Reading Below

Does it matter?

Premium comes a year after Pandora scooped up the assets of now-defunct Rdio, which Pandora acquired for $75 million. The challenge is that Pandora is extremely late to the on-demand streaming market, as it has long focused on its personalized radio model where users had less control over what played next. Consumer preferences are quickly shifting toward on-demand services, but the sector is already rather crowded with much bigger players.

Pandora is offering mostly the same features, including some personalization based on what users like (as indicated by giving songs a thumbs-up). Unfortunately for Pandora, Premium doesn't appear to be meaningfully differentiated from competing services, and its larger rivals wield stronger brands and greater marketing budgets. Premium likely won't overtake its biggest rivals anytime soon.

Meanwhile, there's still speculation that Pandora may soon sell itself to SiriusXM, after reports surfaced earlier this year that it was trying to find a buyer. Pandora reportedly turned down an unofficial offer from the satellite radio company.

10 stocks we like better than Pandora Media
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Pandora Media wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of Nov. 7, 2016

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.