Pandora Media, Inc . P may roll out a couple of new paid subscription plans today at the Wall Street conference, per media reports. Reportedly, the company is planning to start a $10 unlimited streaming plan and another $5 streaming option. It appears that Pandora is trying to make the $5 bundle quite attractive by offering the option to skip certain songs and listen to music offline.
In its last earnings call, CEO Tim Westergren had stated the company's plans to launch an on-demand service in the back half of this year. A report in The Wall Street Journal in Aug 2016 had revealed that the company may start offering the service in a month's time.
However, there has been no official statement regarding the timing and other details of the plan. Moreover, it's being speculated that that company has not been able to get enough licensing deals with major labels.
As of now, this $5 plan seems interesting as it will allow the company to get a bigger share of the market. But not all are pleased with it. This is because Pandora generates higher revenues from advertisements than from subscriptions. Therefore, an increase in subscribers may not necessarily have a positive impact on the top line.
Nonetheless, a $5 plan is not a bad move considering that its peers like Amazon AMZN have already rolled out ad-free plans at similar prices. Moreover, Pandora may also upgrade its existing $4.99 radio plan to this new streaming plan. Since the radio plan was ad-free, the company's sales will not take a significant hit and may even be successful in fending off competition to an extent.
Pandora, which is yet to report profits, has been struggling to post a turnaround while staying independent. The company has been taking a number of initiatives to differentiate its offerings from that of Spotify, Apple AAPL and Amazon and thereby expand its user base.,
Currently, Pandora carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is MeetMe, Inc. MEET , which has a Zacks Rank #2 (Buy).
PANDORA MEDIA Price and Consensus
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.