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Pandora Radio

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By Rachel Blackman

Company

Pandora Radio is an online and mobile personalized radio model that utilizes the Music Genome Project.

The Music Genome Project is an algorithm set by music analysts that matches people to other music they may like based on their taste in artist or song [1]. Essentially, the listener may pick an artist/band, genre, or song and, based on the characteristics and technical elements of their choice, music that has similar traits will be played in accordance in a channel format. Comedy has also recently been added to the Pandora portfolio, so there is the option to explore that realm in the same streaming/radio hybrid system.

Pandora also has a blog section and benefits such as exclusive presale opportunities for concerts as well as premade stations for those who just want to listen to a less narrow selection.

There is a freemium version of the service with advertisements between songs, and a premium subscription service, Pandora One, that costs $4.99 a month for no ads.

Brief History

Pandora Radio is, in many ways, looked at as the originator of the personalized streaming service craze that is so prominent in the world today. Founded in 2000 by Tim Westergren and Jon Kraft, the company began humbly as just the idea of the Music Genome Project.

Come 2005 and beyond, Pandora was fully formed and blew up with popularity[2]. People were discovering music and finding the ease of having it on demand and tailored to their own tastes, a model that every competitor has been utilizing since.

As Spotify exploded and streaming services grew, the attention faded a bit from Pandora, but it is on its way back. At the end of last year, Pandora purchased the concert ticketing entity Ticketfly for $450 million in one of its biggest moves ever[3]. With this merger, Pandora is going to be able to sell tickets through its service, adding to its attraction and uniqueness.

Next, Pandora purchased the streaming service Rdio’s assets for $75 million in efforts to make it into the digital streaming world as direct competition to players like Spotify and Apple Music[4].

The company is currently in a transition period where it is implementing these new acquisitions in order to get ahead of the game in streaming in 2016 and beyond.

New Features

January 28, 2016, Pandora launched a new feature for their app: Browse. Browse recommends and assists people in discovering artists they may like based on their music taste. There is also an analysis level to the feature where listeners can view how many others are enjoying an artist they love, a useful resource for both the creators and the fans. Along with Browse, the app was redesigned to look cleaner and be easier to use[5].

Another exciting and innovative new idea Pandora implemented March 8th is their AMPcast service. AMPcast allows artists to speak to their followers through audio messages they can record on their cell phones and upload to their music channel[6], a valuable form of connection for the artists to their fan base that has not yet been utilized anywhere else.

Live Music

Pandora has been making huge strides in the live music game this year as well. For example, this was their first year as the official streaming partner to the popular and forward-thinking music festival/conference, South By Southwest in Austin, TX. This year, their fittingly named stage Discovery Den hosted hot up-and-coming acts from March 16-19. From hip-hop artists like Kevin Gates and Anderson .Paak to electronic like Louis the Child[7], Pandora was thoughtful and current in its choices and tapped into young, hip audiences in the perfect setting to do so.

April 6th, Pandora announced the lineup for its leap into the hip-hop world via their Pandora Presents: The ATL concert taking place May 5th. Featuring wildly popular rap and hip-hop acts Young Thug, K Camp, and Dej Loaf, Pandora is targeting a key young and musically active audience that they have not been as present with until now[8]

Company structure

The company has been going through some executive changes in 2016, including naming cofounder Tim Westergren as CEO March 28th [9]. Westergren is a musician himself and has always seen the importance in discovering new talent, something Pandora is putting a lot of attention into currently and a concept that will keep them relevant.

Along with this change, there was a restructuring of the upper offices including instating Mike Herring as President and CFO, promoting Sara Clemens from CSO to COO, and putting Chris Phillips in the Chief Product Officer seat [9].

Revenues

Pandora’s 2016 first quarter financial review has not yet been released, but will be made public April 28. Given the numbers from last year, it would appear as though the company is on an upward trend. Their fourth quarter revenue at the end of 2015 was up 25% year-over-year at $336.2 million, and their total revenues for all of 2015 were $1.164 billion, a growth of 26% year-over-year[10]. It is reasonable to expect that this years numbers will be even greater, especially given their acquisitions of Ticketfly and Rdio and their movement into live music.

As for right now, Pandora Media’s stock has gone up 0.04 since its last close with a volume of 9.06m[11].

Finally, Pandora just hit the $2 billion mark on April 18th for artist and songwriter royalties[12].

Overview/Looking to the Future

Pandora is making big moves towards being a powerful player through their innovative new streaming updates, their live music target on hip-hop in particular, and their company restructuring. It should be fascinating to watch how effective their strategies prove to be in execution.

Sources

[1] “About The Music Genome Project®.” (n.d.): n. pag. Retrieved 25 Apr. 2016.

[2] “Origin Story: The Founding of Pandora Radio.” Startup Grind. N.p., n.d. Retrieved 25 Apr. 2016.

[3] Sisario, Ben. “Pandora Buys Ticketfly, a Competitor to Ticketmaster.” The New York Times. The New York Times, 2015. Retrieved 25 Apr. 2016.

[4] “Pandora’s Rdio Acquisition Sets Stage for Epic Streaming Music Battle.” Variety. N.p., 2015. Retrieved 25 Apr. 2016.

[5] “Pandora Debuts New Personalized Destination to Discover Music.” Press Release Distribution, EDGAR Filing, XBRL, Regulatory Filings. N.p., n.d. Retrieved 25 Apr. 2016.

[6] Lunden, Ingrid. “Pandora Raises Its Social Media Game with AMPcast, DIY Audio Messaging For artists.” TechCrunch. N.p., 2016. Retrieved 25 Apr. 2016.

[7] “Pandora Reveals Initial Lineup in Its First Year as the Official SXSW Streaming Partner – NASDAQ.com.” NASDAQ.com. N.p., n.d. Retrieved 25 Apr. 2016.

[8] “Young Thug, K Camp & DeJ Loaf To Perform At Pandora ATL Concert.” Vibe. N.p., 2016. Retrieved 25 Apr. 2016.

[9] “Pandora Brings Back Founder Tim Westergren As Newest CEO.” Forbes. Forbes Magazine, n.d. Retrieved 25 Apr. 2016.

[10] “Pandora Reports Q4 and Full Year 2015 Financial Results.” Press Release Distribution, EDGAR Filing, XBRL, Regulatory Filings. N.p., n.d. Retrieved 25 Apr. 2016.

[11] “Pandora Media Inc.” P Stock Quote. N.p., n.d. Retrieved 25 Apr. 2016.

[12] “Pandora Hits $2 Billion in All-Time Royalties for Artists and Songwriters.” Press Release Distribution, EDGAR Filing, XBRL, Regulatory Filings. N.p., n.d. Retrieved 25 Apr. 2016.

[13] Dufree, Rachel. “Pandora and Ticketfly Join Forces to Create the World’s Most Powerful Music Platform.” Ticketfly. N.p., n.d. Web. 25 Apr. 2016.

[14] “Rdio Adds Free Streaming With Nearly 500 Live Broadcast Stations – Next Geekers.” Next Geekers. N.p., 2015. Web. 25 Apr. 2016.

[15] “Discovery Den at SXSW 2016: Four Days of Your New Favorite Music.” South by Southwest 2016 Music, Film and Interactive Festivals. N.p., 2016. Web. 25 Apr. 2016.

Pandora Radio

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by Kyle Miller

Pandora App Logo (Courtesy of Pandora Pressroom) [1]

2100 Franklin St
Suite 700
Oakland, CA 94612  Telephone #: (510) 451-4100

Overview of Pandora Radio

            Pandora Radio is an internet music streaming company that emerged online in 2005.  The company was founded by Tim Westergren, an award-winning music composer, and currently runs out of Oakland, CA.  Pandora offers a wide library of music to listeners and can help users discover new tracks and artists that are similar to the music they currently enjoy.  The streaming service is fueled by The Music Genome Project, which is an on going music analysis study that has created a formula using specific musical characteristics to help bring each user a unique playlist that caters to their music preference [2].  Pandora Radio is free to any person who enters their site, although there is an option for a paid subscription of $4.99 a month which deems a user a “Pandora One” member.  These members are able to stream music ad free and also get much higher sound quality when streaming [3].

“The Next Song” Pandora Youtube Video. (Courtesy of Youtube) [4]

Interface

Screen Shot 2015-12-01 at 9.53.02 PM

Screen Shot of Pandora Interface. [5]

             Operating Pandora Radio is a simple, yet exciting experience.  With over a million different songs, users are able to search their favorite artists and then get a playlist that will deliver similar music.  When a track appears, users are able read lyrics as the song plays and browse the “About” section to learn more background information on who created the music.  Users can create up to 100 different playlists and can also notify Pandora if they do not enjoy the music, so the site can start to find better songs to fit that user’s preferences. [2]

Key Executives

20_TimWestergren

TimWestergren – Founder of Pandora Radio (Courtesy of Pandora Pressroom) [6]

18_BrianMcAndrews

Brian McAndrews – Chief Executive Officer, President & Chairman (Courtesy of Pandora Pressroom) [8]

Steve Bene – General Counsel (Courtesy of Pandora Pressroom) [7]

 

Finances

       Pandora’s third quarter results of 2015 reported a total revenue of $311.6 million.  This total was a 30% increase from the results of last year’s Q3 mark.  Advertising revenue also rose 31% to a total of $254.7 million [9].   Pandora executives relate this growth to the company’s recent $450 million dollar acquisition of Ticketfly, which makes Pandora a location to now discover and purchase tickets for upcoming live shows, attracting many new users who are avid concert goers [10].  Unfortunately, competition in the music streaming business has been a major concern for Pandora.  On October 23, Pandora had the company’s worst share drop off, falling 35 percent in one day primarily due to the rise of Apple Music and Spotify.  Apple Music recently reported it had 6.5 million paying subscribers, compared to only 3 million Pandora One subscribers who pay a monthly fee [11].

       Pandora currently sits at a $14 stock price, which seems negative for potential investors, but analysts do see potential with the company in the future.  The market currently predicts that Pandora’s premium is going to rise greatly over the next two January calls, signifying that their stock should move back up in the future.  Analysts also expect a major investor to acquire Pandora by 2017 due to the company’s growing diversification and increase in overall revenue [12].

Pandora’s Share Prices of 2015 (Courtesy of Bloomberg.com) [13]

 Interacting with Music Fans

tim-mcgraw-performance-lights-2015-billboard-650

Tim McGraw Performing (Courtesy of Billboard.com) [16]

           Pandora Radio has made great efforts this year to create a close relationship with their audience.  On September 9th, Pandora celebrated their 10 year anniversary by providing ad free streaming to anyone who visited their site.  This thanked fans for the support they had given to Pandora and also allowed people to see what being a paid subscriber entailed [14].  Pandora also stayed committed to their goal of bringing artists and fans closer together.  On November 11th, Pandora and country music star, Tim McGraw, joined together to create a listening party for McGraw’s new album, Damn Country Music.  The event took place in New York City and included a live performance from the country singer that was free of charge for fans [15].  To celebrate the holiday season, Pandora is hosting a concert event in New York City on December 10th.  The show, which will also be available to be streamed at home, will feature acclaimed artists Fall Out Boy, Panic At The Disco, and G-Eazy [17].

Competition

          Digital streaming is the most popular way people are accessing music today.  Although Pandora was created much earlier, streaming services such as Spotify, Apple Music, and Tidal have impacted the market greatly by forming on-demand listening.  In response, Pandora payed $75 million dollars to acquire assets from the music streaming service, Rdio, which recently fell into bankruptcy.  This will eventually make Pandora an on-demand streaming site, which will possibly attract people to leave other sites and use Pandora [18].  Pandora also recently took a major step ahead of competitors by having Adele’s critically acclaimed album, 25, on their site.  Since Pandora does not hold deals with major record labels and does not give their users access to chose the exact song they want, they are able to have the tracks available.  Apple Music, Spotify, and others are restricted from having the number one album, because Adele’s record label chose to forgo streaming sales and focus primarily on selling physical copies [19].

The Future of Pandora

       With the recent acquisition of Rdio, Pandora is preparing for a significant business change.  Unlike their competitor Spotify who offers free streaming, Pandora plans to ally with artists and labels and only offer paid on demand subscription.  This will put Pandora at a large disadvantage compared to Spotify, but the company believes that their main goal is to respect the art of music and the ones who spend handwork creating it [20].  Clear evidence that Pandora wants to honor artists is seen in their recent multi-year deal with Sony/ATV Music Publishing.  Pandora agreed to increase their royalty payments with the largest music publishing company, which will now open new opportunities for Pandora.  They now have the ability to expand to a international market with the music rights they have acquired, which could be a major business move since Pandora is currently only available in the United States, New Zealand, and Australia [21].

      Pandora also expanded their massive music library with many popular pre-1972 recordings of music.  The company reached a $90 million settlement to avoid any copyright allegations, setting the precedent to other streaming companies to respect the artists.  This addition of music attracts an older audience range to Pandora and will hopefully encourage record labels to be reasonable with establishing deals once Pandora begins their on demand service [22].

The Pandora Media Inc. logo is seen on an Apple Inc. iPhone displayed for a photograph in Washington, D.C., U.S., on Tuesday, Sept. 17, 2013. Pandora Media Inc., owner of the biggest Web radio service, filed to raise about $231 million by issuing new shares after its stock more than doubled this year. Photographer: Andrew Harrer/Bloomberg via Getty Images

Pandora Logo on an Iphone (Courtesy of Fortune News) [23]

Sources

  1. Pandora App Logo – press.pandora.com. Retrieved November 28 2015.

    2. About Pandora – Pandora. Retrieved November 28 2015.

    3. Pandora One – Pandora. Retrieved November 28 2015.

    4. The Next Song – YouTube. Retrieved November 28 2015.

    5. Pandora in Action – Pandora. Retrieved November 28 2015.

    6. Headshot of Tim Westergren – press.pandora.com. Retrieved November 28 2015.

    7. Headshot of  Steve Bene – press.pandora.com Retrieved November 28 2015.

    8. Headshot of Brian McAndrews – press.pandora.com Retrieved November 28 2015.

    9. Pandora Q3 2015 Financial Results – investor.pandora.com Retrieved November 28 2015.

   10. Roettgers, Janko (October 7, 2015) Pandora Buys Ticketfly to Sell Concert Tickets to Its Listeners – Variety – Retrieved November 28 2015.

    11. Sisario, Ben (October 23, 2015) Pandora Shares Plummet as Competition Grows – NY Times – Retrieved November 28 2015.

    12. Hagopian, Todd (October 28, 2015) After Pandora’s Steep Drop, An Acquisition Is Almost Inevitable – Seeking Alpha – Retrieved November 28 2015.

    13. Pandora’s Share Price Chart – Bloomberg.com – Retrieved November 28 2015.

    14. Olanoff, Drew (September 1, 2015) Pandora To Celebrate 10th Anniversary With Day of Ad-Free Listening – TechCrunch – Retrieved November 28 2015.

    15. Stutz, Colin (October 27, 2015) Tim McGraw to Celebrate ‘Damn Country Music’ Release With Pandora Mixtape, Party – Billboard – Retrieved November 28 2015.

    16. Tim McGraw Performing – Billboard – Retrieved November 28 2015.

     17. (November 10, 2015) Pandora Holiday: Exclusive NYC Concert and Livestream Featuring Fall Out Boy, Panic! At The Disco, G-Eazy and DJ Sets by Cash Cash – Business Wire – Retrieved November 28 2015.

     18. Owsinski, Bobby (November 18, 2015) – The Pros and Cons of Pandora’s Rdio Acquisition – Forbes – Retrieved November 28 2015.

      19. Kastrenakes, Jacob (November 25, 2015) – Pandora is Streaming Adele’s ’25’ and Her Label Can’t Stop It – The Verge – Retrieved November 28 2015.

      20. Popper, Ben (December 1, 2015) – Pandora Cozies up to the Music Labels as it Prepares to Take on Spotify – The Verge – Retrieved December 1 2015.

      21. Peoples, Glenn (November 13, 2015) – The Pandora-Sony/ATV Deal – Billboard – Retrieved November 29 2015.

     22. Gardner, Eriq (October 22, 2015) – Pandora Reaches $90 Million Settlement With Labels Over Pre-1972 Music – Billboard – Retrieved November 29 2015.

    23. Pandora Logo – Fortune.com – Retrieved November 29 2015.