
In a world with Spotify, Apple Music, Pandora, Tidal, Deezer, Amazon Music, iHeartRadio, and the Neil Young Archives, it’s a little unclear why consumers need another choice for their music streaming and radio needs.
Yet, that’s exactly what Sonos decided to launch this week. This play is a little bit about the music, and a lot about planting a seed for a service business. Let’s take a look below the waterline and figure out why.
Sonos Radio is a free music streaming service available exclusively on the Sonos app, that only works on Sonos speakers. There are three main offerings once you open it up:
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Sonos Presents
This is the home of Sonos’s original programming. It has a flagship station called Sonos Sound System, which is curated by the Sonos team and will include snippets of stories from artists where they discuss their music. There’s also a station curated by Thom Yorke of Radiohead called “In the Absence Thereof…” and will launch other artist stations. Sonos Presents is ad-free. -
Local Radio
Sonos partnered with TuneIn.com and iHeartRadio to bring thousands of local and national radio stations to listeners. These stations are also ad-free. -
Sonos Stations
Sonos launched a collection of over 30 themed listening stations, such as Cocktail Hour, Indie Gold, and New Lords of Metal. These are similar to Sonos Presents, but positioned as having more varied playlists. This is the only offering that is ad-supported.
If you recall our last post on the company asking, “Does Sonos have a moat?” you might remember that one of the biggest concerns we had with Sonos’ strategy was that they had a hardware business model:
...in a hardware business model, the customer only pays once but extracts value over several years. For Sonos, a customer might buy a speaker for $399 and use it for 10 years without paying Sonos again.
The coronavirus pandemic perfectly highlights the problem Sonos has with its customer base. They have seen device usage spike to “New Year’s Eve-level of engagement most days” since the start of the quarantine. But Sonos isn’t making a dime in additional revenue. All those people already paid for their speaker.
A radio service addresses this problem — for the company. Sonos Radio is ad-driven, so as more people listen, Sonos makes more money on the ads it sells.
But, does Sonos Radio address a problem that Sonos customers have? In other words, will enough Sonos customers use Sonos Radio to make an impact on Sonos’s bottom line? Or, will the inclusion of Sonos Radio convince people to become Sonos customers?
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