Pandora Radio

by Ally Thibault


Music has always been a uniting force across the entirety of the human race. It brings people together, projects ideas and opinions across generations, and encapsulates emotions that simply cannot be preserved otherwise. It is a timeless source of comfort and entertainment. While traditional radio has always been a reliable outlet to access music, citizens of the digital age tend to crave more than just what is given to them. People want to hear the music they like.  Seeing this trend in listener niche preferences, Pandora Radio founder Tim Westergren channeled his passion and knowledge of music and created one of the most successful personalized online radio platforms to date.

Pandora Radio is an online radio station and application that allows users to search songs, artists, and albums and creates customized stations featuring music similar to the choice of the user. The creative and analytical muscle behind Pandora comes from the Music Genome Project [3], which is known as “the most comprehensive analysis of music ever undertaken”. The project has collected hundreds of details about virtually every song ever recorded, which allows Pandora to sort songs into all kinds of diverse categories. The main purpose of Pandora is not only to provide a steady stream of music to listeners, but also to introduce them to new and current music akin to their already established tastes. Their overall aims are summed up most succinctly in their mission statement: “To play only music you’ll love”. [1]


Pandora Media, Inc. was originally founded in January 2000 in Oakland, California, where it is now headquartered. Founder Tim Westergren developed the Music Genome Project with the intention of creating playlists tailored to the interests of music listeners. He initially considered licensing the music recommendation service to other major companies, but this proved to flop in terms of generated profit, receiving only a $20,000 fee from Barnes & for further development. After pitching the idea to countless venture capitalists, he finally settled on the idea of an internet radio website powered by the genome. In the early years following its launch in 2005, Pandora encountered multiple close brushes with bankruptcy as the company experimented with different business models and faced steep increases in music royalty fees.  It started quite modestly, used initially by friends and family of Westergren and his colleagues. Since then Pandora has caught fire — in January of 2012, Pandora surpassed the milestone of 125 million registered users.  [2]

USA - Business - Media[10]

Now commandeered by CEO Brian McAndrews, Pandora’s business model has improved in sustainability: centered around generating revenue primarily through online advertisements and, on a lesser scale, subscription fees, and paying royalties to the artists whose music it features. Their third quarter earnings results yielded an increase of $0.07 per share with an overall quarterly revenue of $180 million (positive surprise of +1.02%), with analysts predicting a continued increase on both fronts into the fourth quarter. [4] Over the course of the months following March of 2014, Pandora’s market share increased from 9.11% to 9.13%. In addition, their listener hours have grown 28% year over year in May 2014. Overall, Pandora’s profitability has improved despite royalty price hikes as they have fine-tuned their ad-targeting strategies. [5]

As the online radio industry has seen a surge in popularity over the past couple of years, many competing companies like Spotify have entered the market space to take a gander at the boundless range of music-loving consumers. As a result, Pandora has been pressed into making creative changes and additions to their market appeal strategy in order to distinguish themselves from their competition. The ability to provide their customers with something different and enticing is crucial in maintaining their relevance in the internet radio sphere. With this is mind, Pandora initiated a series of live concerts available for free exclusively for their listeners this past September. They partnered with Lexus to sponsor the pop-up concerts, which took place in Southern California. The performing artists included popular, current acts like MAGIC!, Kongos, and Nico & Vinz. The strategy of distributing the invitations to the concerts was intended to reward Pandora listeners for their loyalty. Pandora determined which users had created unique stations specifically for the artists who would be performing and extended invitations to those who showed a particularly strong interest in the musicians. This allowed Pandora listeners to truly connect with the artists they love, based on how they interacted with them through the online radio platform. Tommy Page, Head of Music Partnerships at Pandora, explained that the concert series demonstrated their “ability to leverage [their] data to create personalized experiences with the fans, as well as…the inroads [they’ve] made with the music industry”. This live concert experience option was unique to Pandora listeners and part of the initiative to differentiate them from their competitors. [6]

Pandora’s “thumbs up” button also brought artists to life for listeners in other ways. On September 5th, a few lucky listeners who clicked the button during a song by classically trained violinist Lindsey Stirling were suddenly prompted by an invitation to video chat with the artist herself.  If they accepted, they were treated to a private conversation and performance from Ms. Stirling from her studio in LA. Since then, Pandora’s #ThumbMoments campaign has brought musicians to life for many of their listeners. These “thumb gifts” will continue to reward listeners for choosing Pandora by granting them access to totally unique experiences that can’t be found anywhere else. Pandora’s Chief Marketing Officer Simon Fleming-Wood explained that the experience aims to hyperbolize that feeling you get when the “perfect song” comes on your Pandora station, and the result is truly emotional. [7]

This fall, Pandora has made great strides in branching out to bring artists closer to listeners. They have begun to focus more of their marketing muscle towards interactive experiences with the music they feature in an attempt to set themselves apart from their competition. Pandora continues to evolve as the industry changes and is certainly a company to keep an eye on in the months to come.



[1] About Pandora Media. (n.d.). Retrieved November 29, 2014, from

[2] Clifford, S. (2007, October 1). Pandora’s Long Strange Trip. Retrieved November 29, 2014, from

[3] Pegoraro, R. (2014, May 24). Pandora’s “Music Genome Project” explores the cold hard facts of how we interact with music. Retrieved November 29, 2014, from

[4] Earnings & Estimates Summary – PANDORA MEDIA INC (P). (2014, November 28). Retrieved November 29, 2014, from

[5] Team, T. (2014, July 22). Pandora Earnings Preview: Growing Market Share and Improving Monetization in Focus. Retrieved November 29, 2014, from

[6] Castillo, M. (2014, September 17). How Pandora Mined Data to Create Lexus-Backed Concert Series. Retrieved November 29, 2014, from

[7] Newman, A. (2014, September 21). A Thumbs-Up Brings Favorite Artists to Life For Pandora Listeners. Retrieved November 29, 2014, from

8] Pandora Radio Logo Banner. Digital image. SoulBridging. N.p., n.d. Web. <>.

9] Sprague, Jonathan. Tim Westergren. Digital image. My Ford Magazine. N.p., n.d. Web. <>.

10] McDermid, Brendan. Brian McAndrews. Digital image. Reuters. N.p., n.d. Web. <>.

Pandora Radio

By Andrew Saltman


Pandora Internet Radio is an online music streaming service that provides listeners with automated playlists based on their likes and listening habits among many other things. Founded by Will Glaser, Jon Kraft, and Tim Westergren in 2000, Pandora was designed to bring users individualized radio stations with great music and no “junk.” Westergren currently sits on the Board of Directors, and Brian McAndrews serves as the company’s CEO. The Music Genome Project is the sophisticated formula that analyzes each song using up to 450 distinct musical characteristics by trained music analysts. The analysts typically have four year degrees in music theory or composition and had to pass a selective screening process and complete an extensive training program in order to accurately analyze songs for the project. Pandora does not use any listening machines to analyze any song, as all analysis comes from the human analysts. [2]

Pandora users are able to create up to 100 unique stations (or playlists) based off an artist, genre or composer. Users are allowed to skip six songs per hour per station, and up to 24 skips across all stations per day. Pandora also allows users to refine their stations by liking or disliking each track they hear. Pandora continues to learn listening habits as users continue to listen and like songs. The more someone uses their Pandora account, the more personalized the stations become. [4]


Pandora got it’s start with investments from both angel investors and venture capitalists, and in June of 2011 the company went public through an IPO. According to Pandora’s 2013 Annual Report, stock prices traded on the NYSE started at $16.00 per share on June 14th, 2011. At the end of the 4th quarter in January of 2013 the high stock price came in at $11.90 with the lowest price at $7.08. Revenue has increased dramatically in the five years that Pandora has been publicly traded. Pandora brought in $19,333,000 in advertising and subscription fees in 2009. In 2013, Pandora brought in almost half a billion dollars at $427,145,000 before expenses. [3] In 2010 Pandora had 16 million users listening to 1.8 billion hours of music. Three years later in 2013, 65.6 million users listened to over 14 billion hours of music. Pandora’s most recent audience metrics for March of 2014 were just released (graphic below). Pandora also announced that after June of 2014 they will no longer publicize its monthly key audience metrics. [5]

Current Endeavors

Peet’s Coffee

In March of 2014, Pandora announced a brand new partnership with Peet’s Coffee & Tea. “Peet’s Coffee & Tea, a premier specialty coffee and tea company, and Pandora, the leading internet radio service, announced a new partnership which marks the first time Pandora will feature partner branded radio stations in a brick-and-mortar environment nationwide” (Pandora) [7]. Peet’s coffee will now play its own customized radio stations in all of the stores across the United States. What makes these stations unique to Peet’s is that they will all be curated by a 25-year employee and music aficionado Patrick Main, not to mention the fact that the new Peet’s stations will be available to all Pandora listeners. Peet’s will have four personalized stations that are meant to pair well with their coffees using music outside what is played on mainstream radio. The stations include Peet’s Melodic Indie meant for bright and fresh coffees, Peet’s Jazz Giants reflecting Peet’s Italian Roast and espressos, Peet’s Origins which enhances Peet’s earthy African blends, and finally Peet’s Eclectic Classical station that should be paired with Peet’s French Roast. This partnership is quite the impressive business venture for both Peet’s and Pandora. Peet’s will be able to compete with the music in rivals like Starbucks that already has a partnership with Apple and iTunes. Pandora will also benefit as they are trying to compete with other streaming services like Spotify and Rdio. Peet’s customers hopefully will enjoy the musical selections in Peet’s coffee shops which will help Peet’s retain customers and help Pandora gain more subscribers. This partnership could be the first of many for Pandora as they attempt to gain more market share in the online streaming world.

Royalty Lawsuit

Although Pandora has been doing very well recently in terms of subscribers and partnerships, they have also gained a lot of negative press in regards to their catalog and royalty payments. In April of 2014, the three major labels Universal Music Group, Warner Music Group, and Sony Music Entertainment, along with indie labels ABKCO and RIAA, filed a copyright infringement lawsuit in New York state court against Pandora. The suit on Pandora is for playing pre-February 15, 1972 recordings without making any royalty payments. “The labels say both digital music services (Pandora & SiriusXM) take advantage of a copyright loophole, since the master recording for copyright wasn’t created federally until 1972. But the labels claim that their master recordings are protected by individual state copyright laws and therefore deserve royalty payments” (Christman) [8]. Michael Huppe, the CEO and President of SoundExchange, a non-profit performance rights organization, estimated that artists and labels have lost 60 million dollars in royalty payments for pre-1972 songs in just 2013 alone.

This lawsuit has come after many artists, like legendary guitarist and songwriter Steve Cropper, have complained about the lack of payments from streaming services, especially Pandora. Songwriters are asking to be compensated for their work due to the fact that Pandora and other streaming services are profiting off of their original content. The case filed against SiriusXM in February is very similar and further along in the legal process. We can expect to see some important rulings and clarity in this case shortly, which will directly affect the Pandora case and whether courts believe songwriters should be compensated for pre-1972 works. SiriusXM’s hearing is set for May 14th. These two cases are extremely important for the world of streaming, as many music industry experts believe streaming is the future of recorded music. A ruling in favor of songwriters and artists could potentially ease the tension between the two camps and have all artists begin to support streaming. Currently many artists are against streaming because they don’t feel they are being properly compensated; however, streaming is significantly more convenient for consumers and could notably help reduce illegal downloading. [8]


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Step 2

Pandora also recently announced that they will be taking open music submissions. This will now make it easier than ever for independent artists to get their music out to over 70 million active listeners on the site. This is an initiative that Pandora will continue to pursue in the coming year in hopes to give independent artists a chance to reach a bigger audience. All independent artists need to do is submit their material digitally online for consideration.

Pandora has a bright future in the online streaming world if they can solve their differences with record labels and songwriters. Their initiatives in the consumer space, like with Peet’s Coffee, and their goals to help independent artists will make them a more attractive destination for music listeners to go to for content.


Works Cited

[1] Pandora – Pandora Logo RT: March 25, 2014

[2] Pandora – About Pandora RT: March 25, 2014

[3] Pandora – 2013 Anual Report RT: April 15, 2014

[4] Pandora – Skip Policy RT: March 25, 2014

[5] Pandora – Corporate Overview RT: March 25, 2014

[6] Pandora – 2014 Audience Metrics RT: April 15, 2014

[7] Pandora – Peet’s Coffee Partnership RT: April 7, 2014

[8] Billboard Magazine – Pandora Lawsuit RT: April 18, 2014

[9] The Trichordist – SiriusXM Royalty Payment Sheet RT: April 15, 2014

[10] Pandora – Music Submission for Independent Artists RT: March 25, 2014