The Little Machines that Built Pandora

Our Infinite Dial studies have been tracking usage of online radio since 1998, and we have asked about 'monthly usage' since 2000.  In a recent meeting I made the comment that if one superimposes the graph showing growth of smartphone ownership over the monthly online radio usage one can see a strong correlation.  That graph is below.  The blue bars show our tracking of smartphones and the yellow line is "monthly online radio usage."  (These graphs are among all respondents ages 12 and older.  For the full Infinite Dial report including methodology, click here.)

One will note the strong correlation between the slopes of the two growth patterns since the widespread adoption of the smartphone.  Online Radio started with usage on desktops, but that clearly only could get things so far.  The real growth came when listening became portable, and when apps built for the mobile environment became a 'must-have' on iPhones and Androids.

A further look at our data turned up a 'more perfect' correlation.  Take a look at the somewhat amazing graph below which tracks monthly use of Pandora against the growth of smartphones:

This is the kind of graph that will get a survey researcher a bit choked up.  Note that the two data sets are in near-perfect correlation.  In each case, monthly usage of Pandora is almost exactly half that of smartphone ownership.  

And while someone out there is thinking: "Correlation does not necessarily imply causation," in this case there is little doubt of causation.  We know that Pandora is the second most downloaded app in the history of the iTunes App stores after a little company called Facebook.  The story is similar in Android. The growth of Pandora can be attributed to many things, but clearly one of the biggest is their successful adaptation to mobile as the smartphone emerged.

As this graph shows, every time two people acquire a smartphone for the first time, one of them will become a monthly user (at least) of Pandora.  These amazing little machines that people carry in pocket or purse have irrevocably altered so many businesses, and Pandora is clearly one of them.   Pandora can attack the challenges of pushing past this 50% conversion rate and of course getting their already enormous user base to use even more.  But in the meantime if you want to project Pandora's future growth, just find projections of smartphone adoption.