A ’90s alternative station should be informed by Seattle grunge, said Jonathan Sasse, senior vice president for marketing at Slacker. Slacker Radio, a competitor with three times as many songs but less than a third of Pandora’s listeners, takes a different approach. Some music lovers dislike Pandora’s approach to choosing music based on its characteristics rather than cultural associations. “It’s a different spin on marketing.” The board agreed to negotiations and after two years settled on a lower rate. Shih, a professor at Harvard Business School who has written a case study on Pandora. “A lot of these users think they’re customers of the cause rather than users per se,” said Willy C. Instead, Pandora hired a lobbyist in Washington and recruited its listeners to write to their representatives. A federal royalty board had raised the fee that online radio stations had to pay to record labels for each song. Pandora’s listenership climbed, and in December 2005, it sold its first ad.īut in 2007, Pandora got news that threatened most of its revenue. Westergren as chief executive with Joe Kennedy, who had experience building consumer products at E-Loan and Saturn. The next order of business: focus the service on consumers instead of businesses, change the name and replace Mr. Westergren took $2 million of it and called another all-hands meeting to pay everyone back. We could tell he was an entrepreneur who wasn’t going to fail.” “But what was incredibly interesting was Tim himself. “The pitch that he gave wasn’t that interesting,” Mr. Larry Marcus, a venture capitalist at Walden Venture Capital and a musician, decided to lead a $9 million investment. In March 2004, he made his 348th pitch seeking backers. The dot-com bubble had burst, and shell-shocked investors were not interested in a company that relied on people, who required salaries and health insurance, instead of computers. Meanwhile, he appealed to venture capitalists, charged up 11 credit cards and considered a company trip to Reno to gamble for more money. Every two weeks, he held all-hands meetings to beg people to work, unpaid, for another two weeks. It was originally called Savage Beast Technologies and sold music recommendation services to businesses like Best Buy.īy the end of 2001, he had 50 employees and no money. This being 1999, he turned the idea into a Web start-up and raised $1.5 million from angel investors. While analyzing the construction of music to figure out what film directors would like, he came up with an idea to create a music genome. Trained as a jazz pianist, he spent a decade playing in rock bands before taking a job as a film composer. It is all a long way from January 2000, when Mr. Last month, it hired a chief financial officer, Steve Cakebread, who had that job at when it went public. Though Pandora’s executives say it is focusing on growth, not a public offering, the company is taking steps to make it possible. Unlike other music services like MySpace Music or Spotify, now available in parts of Europe, listeners cannot request specific songs. Listeners pick a song or musician they like, and Pandora serves up songs with similar qualities - Charlotte Gainsbourg to Feist to Viva Voce to Belle and Sebastian. Its library now has 700,000 songs, each categorized by an employee based on 400 musical attributes, like whether the voice is breathy, like Charlotte Gainsbourg, or gravelly like Tom Waits. Pandora’s success can be credited to old-fashioned perseverance, its ability to harness intense loyalty from users and a willingness to shift directions - from business to consumer, from subscription to free, from computer to mobile - when its fortunes flagged. Revenue will probably be $100 million this year, said Ralph Schackart, a digital media analyst at William Blair. “But now it’s a pretty out-of-body experience.”Īt the end of 2009, Pandora reported its first profitable quarter and $50 million in annual revenue - mostly from ads and the rest from subscriptions and payments from iTunes and when people buy music. Westergren, who is now the company's chief strategy officer. “We were in a pretty deep dark hole for a long time,” said Mr. That could increase as Pandora strikes deals with the makers of cars, televisions and stereos that could one day, Pandora hopes, make it as ubiquitous as AM/FM radio. Pandora’s 48 million users tune in an average 11.6 hours a month. Instead, with a successful iPhone app fueling interest, Pandora is attracting attention from investment bankers who think it could go public, the pinnacle of success for a start-up. Had Pandora died, it would have joined myriad music start-ups in the tech company graveyard, like SpiralFrog and the original Napster.
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