Chart of the Week: Can Pandora Premium compete with Spotify?

Yesterday, Pandora announced the new Pandora Premium, an on-demand music streaming service that seems built from the remnants of Rdio, the streaming service that went bankrupt and was acquired by Pandora last year. And while the music streaming ecosystem is an increasingly crowded market, Pandora’s latest offering has at least one big rival in its sights: Spotify.

Early reviews of Pandora Premium highlight a few key features that differentiate it from its Swedish competitor, such as tools that leverage Pandora’s Music Genome Project to guide song curation and playlist creation. If Pandora Premium delivers a streamlined user interface combined with a powerful recommendation and curation engine, it may be able to finally help the struggling company – but it’s not slated to launch until sometime in early 2017. In the meantime, new rumors are circulating that Pandora is on the verge of selling itself to Sirius XM.

Is Pandora really in a position to compete with Spotify? Verto Analytics took a look at the existing app user bases for both Pandora and Spotify to see who’s winning the numbers and (more importantly) the user engagement race.

Pandora vs. Spotify: Who Wins User Engagement?

When it comes to sheer user numbers, Pandora has the lead: its app reported 31.4 million U.S. users (among adults, ages 18 and above) last month, nearly twice as many users as Spotify’s 18.5 million users. But while Spotify’s user base may be smaller, it’s much more engaged: users spent an average of 2 hours and 46 minutes per month using the Spotify app, compared to just over an hour and a half for Pandora users. And Spotify’s user base also show a slightly greater tendency towards using the app on multiple devices – an important behavior to note as consumers increasingly consume content across devices (an important trend to watch as we head towards 2017).

While Pandora has quite a head start on user cultivation – the company was founded in 2000, six years before Spotify – its latest engagement numbers appear to show flagging user engagement. If the company intends to market Pandora Premium to its existing user base as well as lure new subscribers away from rival services, it may need to take a hard look at its engagement metrics first.

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