Facebook Will Buy Pandora

The Big Prediction

I predict Facebook will buy Pandora. Here’s why:

  1. Business Model: Everybody listens to music. Nobody wants to pay for it. This creates hiccups in the marketplace, a range of business models, nearly all of them doomed to failure, and all of which are better served at scale: advertising, data capture, free music in exchange for using and/or buying another product or service. No one does scale better than Facebook.
  2. Money: It does not matter that Apple Music sucks. It’s confusing, anti-user-friendly, a play by Big Apple to kill the streaming industry and keep iPhone users happy. Apple can buy up exclusive content, undercut any price Pandora offers, lock Pandora (and other competitors) out of key iOS features, and throw out $250 million a year for the next 10 years and not even notice it. No standalone streaming service can compete. Pandora’s $3.2 billion *market cap* is 15 days of Apple profits. It’s like one solar panel company, with no government support, going up against Big Oil. Can’t happen, won’t happen. Streaming music *must* have a patron. Facebook isn’t shy about spending.
  3. Connection: The best way to connect artists with fans is Twitter, but Twitter has no money and is in turmoil. Facebook has the second best platform to link artists with fans.
  4. Sharing: listeners love to share what they are listening to, which acts they love, which new bands they are now fans of, and Facebook offers the very best platform to share this with friends, family and others.
  5. Scale: everyone listens to music, everywhere, and Facebook wants to connect everyone, everywhere.
  6. Teens: teens and 20-somethings (still) use music to unlock, determine and promote their identity. A core mission of Facebook is to get everyone on its platform, to know who they are, actually, and what they like, presently. Win win.
  7. Lock in: a core Facebook strategy is to offer any content, video, pictures, news — even music — that keeps us locked inside Facebook all day, day after day, year after year. Music streaming, supported by ads, telling Facebook which songs we love, which artists we love, what we don’t want to hear, is highly monetizable information that also keeps us inside Facebook.
  8. Distro: streaming music requires a massively scaleable distribution platform, including cloud support, desktop app, web, mobile app, methods to share with friends, such as via messaging apps. Facebook has this down cold.
  9. Coolness not necessary: the music industry is a contorted melange of ego, insecurity, talent, legacy, randomness, and desperation. Fuck em. Zuckerberg and Facebook are anti-cool, and that’s fine. They offer the potential to create personalized radio stations for every person, every taste, letting everyone hear exactly what they want, share what they want, prove how cool, hip, part of the in-crowd they are, or to just simply enjoy. For Facebook, it’s about identity, data, branding and scale, and music enables all of these.
  10. Payments: for the rare person who wishes to buy a song, or an album, an artist’s memorabilia, to gift a song to friends via messaging apps, to buy tickets for a concert, or to buy a heart sticker for the Taylor Swift Facebook fan page, these will require a payments platform and Facebook badly wants to have a viable payments platform. Music will help make this possible.