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Can Pandora and Amazon disrupt the streaming music business?

"Questlove Supreme" is a new radio show in collaboration with Pandora.
Dimitrios Kambouris/Getty Images for Cartier
In this file photo, a banner for Pandora Media Inc., the online-radio company, hangs in front of the New York Stock Exchange walk on its first day of trading as a public company on June 15, 2011 in New York City.
Spencer Platt/Getty Images

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Pandora may be the streaming app that your uncle uses, but it’s still a major contender with on-demand services like Spotify or Apple Music.

With about 78 million Pandora users, it’s clear that some people don’t mind hearing the Bee Gees when they thought they’d asked for The Beatles.

But Pandora has now announced some major changes to its current model. After years of emphasizing its online radio service, Pandora appears to be rethinking or expanding its business model. The company has recently struck deals with content providers like Warner Music Group, and it plans to launch a new service later this year that looks similar to Spotify at a cost of only $5 per month.

We reached Ben Sisario, who covers music for the New York Times, to get more of an idea of what Pandora has in mind. He explained:

They basically want to prove to the music industry and especially to the artists who have been beating up on them a bit for how much they pay, that they can get more people to actually pay for music. So they introduced this new service. It costs five bucks and you can listen to music, it eliminates the ads and there's a few more gimmicks they throw in there. You can skip more songs and you can save some songs offline.

Meanwhile Amazon wants to capitalize on its name recognition by carving out a place for itself in the streaming music space. The details are still forming, but Sisario reports that one plan for an Amazon on-demand service will have two tiers of service. One will cost the going rate of $10 per month. The other could cost as low as $5 per month for those consumers who also buy Amazon's Echo speaker system, which would be a huge break in the price point.

Both companies realize that they'll need to offer consumers something unique to lure them away from Spotify or Apple Music. One way that Pandora is hoping to entice people is through its content partnership with hip-hop legend Questlove. Sisario tells The Frame the thinking behind this:

It's what they call a content play. It's a way to get an interesting show on their service to get people to pay attention to it. Is it enough to get people en masse, you know, millions of them to sign up and now to get them to pay? Nobody really knows.

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