It was only about a week ago that Internet radio provider Slacker announced a deal with AOL Music that would make Slacker the backbone of AOL's (NYSE:AOL) service. AOL Music generates 3 million unique users per month, exposure that is worth noting. Now this week Slacker has worked out a deal with AARP to provide 18 music channels to the organizations 37 million members.
Pandora (NYSE:P) recently went public and should be eager to work out these types of deals for added exposure. When looking at Pandora's demographics it is quite easy to note that the service carries less appeal to folks over 35. AARP, which allows members from age of 50 and up would be a key demographic that Pandora would seemingly want to tap into. Somehow, though, Slacker seems to be beating Pandora to the punch. This is the second time in a matter of weeks that Slacker has been able to trump its bigger rival.
While details of the deal are not public, Slacker will see the revenue benefits of audio advertising for a very targeted audience. Targeted advertising is the most lucrative, and AARP Radio is a huge win for Slacker. Slacker may even get a slice of the Internet advertising on the AARP Music website.
This translates to instant revenue for a company like Slacker, as well as brand loyalty. Members of AARP are considered interactive with the organization, and it is only natural that with prominent placement on the main page AARP Internet Radio will be a successful venture.
I realize that Pandora has expended a lot of energy in going public, but it needs to keep its eye on the ball and work out these types of deals before the smaller competitors do.
AARP Radio is not a new upstart Internet Radio company. It is a branded service powered by existing Internet radio service Slacker. Slacker is showing the initiative and innovation that Pandora seems to now lack. If Pandora wants to impress the street it needs to perform both financially and in the consumer marketplace.
Satellite radio fans may wonder where Sirius XM (NASDAQ:SIRI) is in this mix. The satellite radio provider can get a little slack here (pun intended) because its business model is commercial free radio and AARP is advertising supported. The model of AARP Radio is that it is a free benefit to members. Sirius XM would have had to charge in order to deliver these channels, or shift into a "service" type customized model that is ad supported. While this deal is not directly up Sirius XM's alley, it may be an interesting branch for the company to consider in the future. Satellite radio investors should also see this type of deal as a method that allows the competition to generate revenues, and monitor it accordingly.
The big winner in this story is Slacker. The loser is Pandora.
Disclosure: I am long SIRI.
Additional disclosure: I have no position in Pandora.