I have a business card from Jessica Stoner Steel, EVP of Biz Dev at Pandora, that she gave me when we first met, sometime in the early 2000s. The card doesn’t say Pandora, it says Savage Beast Technologies, powered by the Music Genome Project. That was before the site was live, and before any of us had ever heard of Pandora. As far as I know, Jessica was one of Pandora’s very earliest employees.
Now Pandora has 275 employees, and has taken the lead position in Internet radio in the US. Of the top measured sites and stations in the US, they can claim a 50% share of listening.
The SEC filing says that they changed their name to Pandora in May 2005. It’s taken less than six years for Westergren and his team to build a brand and execute a vision, and they have done it very very well.
I remember that early conversation with Jessica Stoner (Steel). She was firm in her belief that what they were doing – it wasn’t live and she wasn’t revealing much – was revolutionary. Good for artists and listeners. Better than what anyone else was offering. In fact, her confidence seemed to me at the time to be a little cocky. But I never forgot the conversation.
I think the one thing that Westergren and his team have had from the very beginning was a vision. A dream. A conviction. That their Music Genome Project would revolutionize listening and satisfy artists and listeners. Really, the biggest thing that Pandora has had going for it from the beginning was Tim Westergren and his passion. He started traveling around the country holding town hall meetings to connect with listeners. Preach his vision. Build his brand. And he did it with genuine passion and dedication to both sides, the artists and the audience.
Pandora is an epidemic, in the very best, Tipping Point kind of way. And if the past five or six years is any indication, Pandora’s IPO will be a success.
By now you’ve probably heard that Pandora has moved to go public. On friday afternoon they filed a registration statement with the Securities and Exchange Commission of their intention to sell shares via an IPO as soon as possible after the filing. They seek to raise $100,000,000.
The document they filed is full of great info about their business and their strategy.
Pandora says they are redefining radio from a one to many to a one to one radio listening experience by enabling personalization and discovery. Their Music Genome Project, which assigns attributes to songs and then is able to define and deliver an individual’s preferences for music, is their key weapon. Listeners choose to listen to Pandora because of this service, because it is free and because it is everywhere. Advertisers choose the service because it offers a one to one delivery, multi platform options, and an “enhanced messaging environment.”
Pandora has 80 million registered users. Listening on mobile devices is higher than on computers. According to AndoMedia’s ranking of the top 20 stations or networks in the US they have more than a 50% share. Perhaps they should have added the caveat that not all stations or networks are measured by Ando’s service, however they do list their reliance on third party measurement services as one of their risks.
In the first nine months or 3 quarters of last year their revenue was slightly more than $90 million, $78 million of that was ad sales and the remainder was subscription. The ad revenue number includes more than $6.6 million in ads they run as part of the Google ad network.
A daunting 60% of those dollars are paid out in royalties which they call “content acquisition”. Pandora was not profitable last year based on income and expenses for the first 3 quarters. In the fiscal year ending January 2010 they lost $16.8 million.
Westergren owns 2.4% of the company he founded by maxxing out credit card after credit card back in the early 2000s. CEO Joe Kennedy has 2.7%.
Pandora’s going public is big news for Internet radio. They are by far the most widely known Internet radio service in the US, and their success or failure will impact the ability of other services to do the same. May they thrive…