Pandora inserts audio ads into its free music stream

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TechCrunch reports that Pandora Radio has started serving audio ads.

Pandora, like Last.fm, provides a free, personalised stream of music over the web to your desktop (Pandora also offers an iPhone app, although the whole Pandora service is restricted to the US). The two services aim to harness the wisdom of crowds by listening to the music you play and then streaming tracks to you that you might like based on the listening habits of millions of other users.

As I understand it, the business is seen to be closer to radio than to music sales, which keeps the royalty rates down. However, they are not non-existent, and it was inevitable that Pandora would have to find ways to monetize the service.

To date that has been primarily though image ads, but inserting audio ads into the stream is an obvious next step. For users who find it too intrusive, there is always the option of subscribing to the $36 per annum premium service.

These issues are just like those facing casual games companies trying to insert 15 second pre-roll ads into the gameplay experience. We’ll be watching Pandora to see how well it persuades its customers that listening to the occasional advert is a fair exchange for a free, personalised radio station.

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