Pandora deal
The music-streaming service says it will pay $450 million for online seller Ticketfly.
The streaming service is buying its way into concert ticketing by paying $450 million for Ticketf ly.
Pandora Media Inc., which runs the largest Internet radio service, is buying its way into the concert ticketing business in a move to shore up relationships with artists and record labels.
The Oakland-based music-streaming service said Wednesday that it would pay $450 million for Ticketfly, an online seller of concert passes that competes with Live Nation’s Ticketmaster.
The acquisition marks a major change for Pandora, which has previously generated revenue almost entirely from advertising and subscriptions to its online radio stations, which count roughly 80 million listeners a month.
San Francisco-based Ticketfly last year sold 16 million passes to about 90,000 live events, generating more than $500 million in sales, the companies said.
Pandora Chief Executive Brian McAndrews called the deal a “game changer” in a statement.
Ticketfly is best known for serving smaller music venues, rather than stadiums and arenas. In the Los Angeles area, concert spaces such as the Troubadour in West Hollywood and the Echo in Echo Park make their tickets available on Ticketfly.
Pandora has long used listener data to suggest music for — and target ads at — users through its stations.
The decade-old company has made moves to improve its use of data to help fend off competitors in the musicstreaming field such as Spotify, Tidal and Apple Music. Pandora acquired the music analytics start-up Next Big Sound in May.
Now Pandora says it wants to use its data to help touring artists better find their fans and sell more tickets. The move comes as Pandora has tried to improve its relationships with artists after coming under fire for the paltry royalty rates generated from streaming.
Analysts said building alliances with artists and labels is crucial for Pandora as it tries to hammer out the licensing deals that will allow it to expand beyond the United States. Currently Pandora is only available in the U.S., Australia and New Zealand. Rivals Apple Music, Rhapsody and Spotify have users in dozens of countries around the world.
“Behind the scenes we see Pandora’s management actively seeking ways to add value to artists and labels beyond royalty payments,” said Piper Jaffray analyst James Marsh, in a note to clients. “We expect these initiatives to help pave the way for direct licensing deals that could enable Pandora to offer its service in markets outside the U.S.”
Pandora’s shares nonetheless fell $1, or 4.5%, to $20.98 on Wednesday.
Media analyst Rich Greenfield expressed doubts that the purchase of Ticketf ly is a wise use of capital for Pandora, which has struggled to generate profits. “Ticketing is a really hard business that appears to have significant risk for Pandora,” he wrote in a research note.
In a blog post, Andrew Dreskin, co-founder and CEO of Ticketfly, described the transition as “bittersweet.” He will stay with the company after the acquisition closes, according to a Pandora spokeswoman.
“Selling your baby is never easy … but I trust my friends at Pandora and believe that they have Ticketfly’s best interests at heart and won’t do anything to change what makes us so special,” Dreskin said.