Web Music Players Strike a New Chord


"It's activating the real fans of these artists because it's giving them access to something they wouldn't otherwise have," Wade said.

Pandora, meanwhile, is trying to develop a multiplatform strategy that offers advertisers a way to reach users through the desktop experience, with add-ons like branded playlists, two audio ads per hour inserted into the content and mobile placements. It also has one of the most popular iPhone apps -- it's the No. 1 free music app in the iTunes Store -- and is running mobile campaigns for brands like Dockers. All told, Pandora's mobile applications have been downloaded 9.2 million times, according to the company.

"What we're finding with the advertising community is [it's interested in] the ubiquitous nature of the mobile application," said John Trimble, Pandora's chief revenue officer.

Imeem is eyeing profitability in early 2010, its executive say, having just closed its best quarter ever of ad sales. It's typical ad deal approaches $100,000, according to Wade. Pandora is also on the road to profitability, according to Trimble. Its sales are on target to double this year to near $40 million, he said.

Yet the sites are far from in the clear. For one, there's evidence that while some sites are growing at a fast clip, including MySpace Music and Pandora, for others the days of heady growth online are over. According to comScore, imeem's U.S. audience, for instance, declined 12 percent over the past year to 6.3 million visitors in July.

Pandora has continued to grow from a smaller base -- it attracted 6.8 million unique visitors in July, up 42 percent -- but its challenge is to assure advertisers its users are engaged in their messages rather than simply having them run in the background.

The sites also realize that advertising is not enough, and are diversifying their business to include downloads and subscriptions. Imeem, which used to link to iTunes and Amazon, is starting a download store, which will allow it to capture more of the revenue than a referral fee. Pandora is requiring heavy users to pay a subscription fee. Even the business model of a newcomer like Spotify includes fee-based options.

Said IDC's Kevorkian: "It might make more sense to create a hybrid model of some ad support with a low monthly fee."