Slacker Radio logo (Photo: Slacker.com)
LOS ANGELES - Being No. 3 isn't such a bad deal for Slacker.
The online radio service - with 35 million registered users, way behind industry leader Pandora (200 million) and Clear Channel's iHeartRadio (170 million) - relaunched with a facelift in February and likes what it sees.
The San Diego-based service offers programmed radio stations, personalized radio and on-demand music. It has picked up 6 million new listeners since the redesign, and folks are staying to listen longer.
For the re-launch, "We wanted to broaden our wings and go after the average listener," says Slacker CEO Jim Cady. "What we had was a very powerful service. The challenge was that it wasn't very user-friendly."
So out came the redesign and fresh coat of paint. Slacker introduced a new tool, Fine-Tune, that lets consumers move sliders up or down to adjust the mix of related artists, favorite and popular songs and newer or older songs.
Slacker was formed in 2006 as a more aggressively programmed online radio offering for consumers. At first it focused on a $200 Slacker-branded MP3 player to make its music mobile. That fizzled, and Slacker turned to cutting deals with wireless manufacturers (mostly Android and BlackBerry) to feature the service.
It never found a huge audience on Apple's iPhone as prime space on the device is harder to come by, and Pandora had a big head start there, Cady says.
What makes Slacker most different from Pandora and other online radio services, such as iHeartRadio and CBS' Last.fm, is that it takes a more aggressive approach to programming. It has 200 pre-programmed radio stations in addition to stations based on your tastes. The basic service is free. You can pay $3.99 for an ad-free version or $9.99 to subscribe to on-demand music (similar to services from Spotify and Rhapsody). Slacker also runs news and sports programming from ABC and ESPN.
Steve Jones, general manager of ABC Radio, says he's seen a boost on Slacker since the relaunch. "Our audience has grown 3% to 4% every week since February," he says. "We're thrilled."
Prior to the relaunch, awareness of the service was lacking.
At the end of 2012, researcher NPD surveyed consumers and asked which service they were familiar with. Pandora was best known, with 58% of consumers, compared with 37% for on-demand service Rhapsody, 35% for Clear Channel's free online radio service iHeartRadio, 24% for on-demand Spotify and 13% for Slacker.
"Slacker was a service in need of this relaunch," says Russ Crupnick, an NPD analyst. "While they had better awareness than some of the other services - nobody knew who MOG or Rdio was - people couldn't listen if they weren't familiar with the service."
The company is owned by Cady, other Slacker staffers and four venture-capital firms - Mission Ventures, Rho Capital Partners, Centennial Ventures and Columbia Ventures. Overall, the company has raised $50 million.
Cady predicts Slacker will be profitable by the end of the year.
Pandora has had a few profitable quarters but currently is unprofitable. Michael Pachter, an analyst at Wedbush Securities, says Slacker's route to profitability trumps Pandora's for a simple reason: It runs more ads.
"Slacker is one-sixth the size of Pandora, and both run ads," he says. "Slacker does three minutes per hour, Pandora one per hour. It's that simple."
Meanwhile, like many of its competitors, Slacker sees a big future in the car. The company is working with various car and audio-device manufacturers to get Slacker into car stereos and in the dashboard. It is currently in cars by Chrysler, Tesla and Acura.
"We think the car is a big thing for us," Cady says. "That's where 70% to 75% of all listening happens."
Slacker is playing catch-up to Pandora, which has many more deals, but Cady says it's a priority. Getting audience on mobile and desktops is the beginning, he says, "But the long-term win is having a key position in the car that's easy for the consumer to use."
By Jefferson Graham