Pandora 2016 Annual Report Download - page 21

We compete for listeners with broadcast radio providers, including terrestrial radio providers. Many broadcast radio
companies own large numbers of radio stations or other media properties. Many terrestrial radio stations have begun
broadcasting digital signals, which provide high quality audio transmission. Broadcast and satellite radio companies generally
enjoy larger established audiences and a significant cost advantage because they pay a much lower percentage of revenue for
transmissions of sound recordings. Broadcast radio companies pay no royalties for the radio broadcast of sound recordings, and
satellite radio companies paid only 10% of revenue in 2015 and will pay only 10.5% of revenue in 2016 for its satellite
transmissions of sound recordings. By contrast, Pandora incurred content acquisition costs representing 46% of revenue for our
internet transmissions of sound recordings during the twelve months ended December 31, 2015.
We also face competition for listeners and listener hours from interactive music streaming services such as Spotify,
Apple Music, YouTube, Google Play Music, Amazon Prime, Rhapsody, and Deezer. These services offer consumers the ability
to choose the songs and artists they want to hear, create customized playlists and download music for play offline -
functionality that our service does not provide.
This interactive on-demand content is accessible in automobiles and homes, using portable players, mobile phones and
other wireless and consumer electronic devices. The audio entertainment marketplace continues to rapidly evolve, providing
our listeners with a growing number of alternatives and new media platforms.
At a macro level, we compete for the time and attention of our listeners with providers of other forms of in-home and
mobile entertainment. To the extent existing or potential listeners choose to watch cable television, stream video from on-
demand services or play interactive video games on their home-entertainment system, computer or mobile phone rather than
listen to the Pandora service, these content services pose a competitive threat.
Competition for Advertisers
We compete with other content providers for a share of our advertising customers' overall marketing budgets. We
compete on the basis of a number of factors, including perceived return on investment, effectiveness and relevance of our
advertising products, pricing structure and ability to deliver large volumes or precise types of ads to targeted demographics. We
believe that our ability to deliver targeted and relevant ads across a wide range of platforms allows us to compete favorably on
the basis of these factors and justify a long-term profitable pricing structure. However, the market for online advertising
solutions is intensely competitive and rapidly changing, and with the introduction of new technologies and market entrants, we
expect competition to intensify in the future. Our competitors include Facebook, Google, MSN, Yahoo!, ABC, CBS, FOX,
NBC, The New York Times and the Wall Street Journal. We directly compete against iHeartRadio, Entercom, Cumulus and
other companies of the traditional broadcast radio market. For additional details on risks related to competition for advertisers,
please refer to the section entitled "Risk Factors."
The market for online advertising has become increasingly competitive, yet advertisers are allocating increasing amounts
of their overall marketing budgets to online advertising. We compete for online advertisers with other internet companies,
including major internet portals, search engine companies and social media sites. Large internet companies with greater brand
recognition have significant numbers of direct sales personnel, more advanced programmatic advertising capabilities and
substantial proprietary advertising inventory and web traffic that provide a significant competitive advantage and have a
significant impact on pricing for internet advertising and web traffic.
Terrestrial broadcast, and to a lesser extent satellite radio, are significant sources of competition for advertising dollars.
These radio providers deliver ads across a more familiar platform than the internet may be to traditional advertisers.
We also compete for advertising dollars with other traditional media companies in television and print. These traditional
outlets present us with a number of competitive challenges in attracting advertisers, including large established audiences,
longer operating histories, greater brand recognition and a growing presence on the internet.
Ticketfly
Competition for Clients
We compete with other online live events technology and primary ticketing companies for contracts with promoters and
venues. We compete on the basis of a number of factors, including our ability to sell tickets and provide enhanced fan
experiences. Our ticketing platform also offers website, email, social marketing, booking, analytics, fan CRM and other tools
for our clients. Cloud technology has made it easier for other technology-based companies to offer primary ticketing services
Table of Contents
10