Why Loyalty Programs Are Needed for Pandora & Spotify

I love Pandora. Truly. But it’s under attack. Spotify has long been a worthy competitor for time, attention, and subscription dollars. The Spotify offering keeps getting better, and with offerings like its “Discover Weekly” playlist, it’s moving away from its “much loved favorites” terrain straight into Pandora’s fertile “discovery” territory.

Meanwhile, in Cupertino, Apple is planning to sink both their battleships with iTunes Radio.

What makes the competition so interesting is that it’s being played with each competitor using exactly the same ingredients. A song sounds the same regardless of what service you’re listening on. Pricing, convenience and all the usual x factors are very similar too.

SO it basically comes down to User Experience. Both apps (and both Spotify and Pandora are clear majority mobile engagement) rely heavily on personalization— taking your in-app behavior of the past and using it to predict future engagement preferences.

Both do a really good job in my view.

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But they both have one glaring omission. Neither has much of a loyalty program. Neither works hard enough, in my view, to keep me listening—both in terms of shares of listening occasions (crossover between the two is very significant) as well as the duration of each session. Why not give me discounts on media purchases (or even their subscription fees), concert tickets, SWAG or the like? Why not preferred seats at venues ala Comcast’s “Red Zone”?

Bottom line: if I felt more listening meant more _____, I’d probably do it more.

At the end of the day, both companies have a variable revenue component that’s pegged entirely to ad revenue. The more ears they grab— whether more sessions, longer ones or (ideally) a combination of the two, the more ad revenue they stand to gain.

Delivering perks for time might take one of these two straight to the top of the charts.