Pandora is an American subscription-based music streaming service owned by the broadcasting corporation SiriusXM that is based in Oakland, California, United States. The service carries a focus on recommendations based on the "Music Genome Project", which is a means of classifying individual songs by musical traits such as genres and shared instrumentation. The service originally launched in the consumer market as an internet radio service that would generate personalized channels based on these traits as well as specific tracks liked by the user; this service is available in an advertising-supported tier and additionally a subscription-based version. In 2017, the service launched Pandora Premium, which is an on-demand version of the service more in line with contemporary competitors.
The company was founded in 2000 as Savage Beast Technologies, and initially conceived as a business-to-business company licensing the Music Genome Project to retailers as a recommendation platform. In 2005, the company shifted its focus to the consumer market by launching Pandora as an internet radio product. Pandora is a freemium service; basic features are free with advertisements or limitations, while additional features, such as improved streaming quality, music downloads and offline channels are offered via paid subscriptions.
In February 2019, SiriusXM acquired Pandora for $3.5 billion in stock. In 2021, Pandora had about 55.9 million active monthly users, and 6.4 million subscribers. , Pandora reportedly had fewer than 50 million active users. As of 2023, there were 46 million users.
History
Early history In 2000, Will Glaser, Jon Kraft, and Tim Westergren founded the company as Savage Beast Technologies. Will Glaser had conceptualized the concept of classifying music by various traits and attributes—an effort that he would later name the "Music Genome Project". The company was originally pitched as an e-commerce service that would use Glaser's associated algorithm as a recommendation engine, but this idea was scrapped after the dot-com bubble hit its peak in March 2000. Afterwards, the company pursued licensing the technology to other retailers, such as AOL Music and Best Buy (who used it for in-store kiosks as a trial).
The company faced increasing debt, and ran through its initial $2 million in funding by 2001. Glaser, Kraft, and Westergren then convinced Savage Beast's 50 employees to work for two years without pay, prompting a lawsuit by former employees in 2003 due to deferred salaries being illegal under California law. After settling the suit, just a few employees were laid off. In 2004, based on the success of the Best Buy pilot, Walden Venture Capital led an $8 million round of funding, and hired Joe Kennedy—formerly of automaker Saturn—as its new CEO. After agreements with Best Buy and Borders lapsed, the company began to shift its attention to the consumer market, resulting in the development of Pandora as an internet radio service using the Music Genome Project as a personalization system.
After a beta period, Pandora officially launched in August 2005. Upon its launch, it was a subscription-based service, but added a free, ad-supported version in November after Westergren realized users were abusing its 10-hour free trial by making new e-mail addresses. Advertising could also be targeted based on the current song.
Growth In 2011, Pandora went public via an initial public offering on the New York Stock Exchange. At the time, Pandora had 800,000 tracks from 80,000 artists in its library and 80 million users. As of end of mid-year 2018, Pandora had 71.4 million active users.
On March 7, 2013, Pandora chairman and chief executive officer Joseph J. Kennedy announced that he would leave the company after nine years.
In April 2013, Pandora announced that its radio streaming service had 200 million users, including 70 million monthly active users. By December 2013, Pandora accounted for 70% of all internet radio listening in the United States.
On September 1, 2013, Pandora removed a 40-hour-per-month limitation for free mobile listening. As of October 2014, less than 5 percent of active listeners were paying subscribers.
By November 2014, Pandora had approximately doubled its library size, topping 1.5 million songs.
On September 15, 2016, Pandora launched "Pandora Plus", a new $4.99 subscription service to compete with other streaming services.
In early 2017, Pandora revealed that 56 million of its 81 million active users subscribed to the Today's Country station and that country music had accounted for more than 1.7 billion listening hours on the platform in 2016.
On July 31, 2017, Pandora discontinued services in Australia and New Zealand, citing a need to focus solely on the U.S. market.
In September 2017, Roger Lynch became CEO and stated that he wanted to expand the service's focus on podcasts, with similar discovery features to those for music as well as new monetization options. In January 2019, Lynch's departure was announced following the approval of Sirius XM's acquisition of Pandora. Lynch will be replaced by Sirius XM CEO Jim Meyer.
On February 26, 2019, Pandora announced the launch of Pandora Stories, a marketing tool for artists. The feature allows artists to build music playlists combined with voice tracks, where they can add a narrative and deeper insights.
In October 2019, Pandora's parent company, Sirius XM, signed a multiyear deal with Marvel to launch a series of superhero-based podcasts in 2020.
Acquisitions On June 11, 2013, Pandora announced it would purchase FM radio station KXMZ in Rapid City, South Dakota. On October 7, 2015, Pandora announced it had acquired independent ticketing agency Ticketfly for $450 million, which it subsequently sold to Eventbrite for $200 million on June 9, 2017.
In November 2015, streaming music service Rdio, founded by Skype co-founders Janus Friis and Niklas Zennström, declared bankruptcy and sold its assets to Pandora for $75 million.By James Risley, GeekWire. "Rdio to shut down streaming music service, sells assets to Pandora for $75M." November 16, 2015. November 17, 2015. Pandora retained 100 Rdio employees, including Iain Morris and Rich Masio, who joined a growing licensing department in pursuit of direct licenses with labels and publishers.
In March 2018, Pandora announced it would acquire digital audio ad technology firm AdsWizz for $145 million.
In February 2019, SiriusXM acquired Pandora for $3.5 billion in stock. In June 2020, Sirius XM acquired podcast service provider Simplecast, pairing it with AdsWizz within its Pandora portfolio.
In July 2020, Sirius XM acquired Stitcher for $325 million. Following the acquisition, Sirius XM integrated Stitcher's exclusive podcasts into its additional music and podcast listening service, Pandora. At the peak of its popularity, Stitcher was reported to have nearly 14.5 million weekly users.
In 2022, Sirius XM acquired Cloud Cover Media, Inc, which handles music for businesses, and merged it with Pandora to form Pandora Cloudcover.
Features
Streaming Listeners can tune into established genre stations, other users' stations or create their own stations based on their musical interests. The user can use thumbs up and thumbs down buttons to declare whether they like a track or not, which determines whether similar songs should be played in the station. A second thumbs down to the same artist will ban that artist from the selected station. A thumbs down immediately skips a song, but the number of times a user can skip tracks is limited unless they are using one of the paid subscription plans, or opts to watch a video ad. More than 450 musical attributes are considered when selecting the next song. These 450 attributes are combined into larger groups called focus traits, of which there are 2,000. Examples of these are rhythm syncopation, key tonality, and vocal harmonies.
Pandora is available in a free advertising-supported service, and a subscription-based tier known as "Pandora Plus" (rebranded from "Pandora One" in September 2015), which also features offline playback support using a prediction mechanism, and more skips and replays.
In March 2017, a third tier known as "Pandora Premium" was launched, which allows users to listen to and create playlists of individual songs on-demand (making it more in line with competing services such as Apple Music and Spotify). The recommendation engine can also be used to generate playlists of similar songs. Pandora also emphasized a use of machine learning and manual curation, including filtering out low-quality content such as "knock-off covers" and karaoke tracks.
In October 2019, Pandora added full song credits to their app, displaying the data on who contributed to which song.
Limitations Initially, users with free accounts could listen to 40 hours of music a month, and could pay $0.99 per month for unlimited streaming. In September 2011, Pandora removed the 40-hour listening limit."New Pandora for All" . Pandora Blog. September 22, 2011. Retrieved September 3, 2011. This 40-hour limit on free listening was re-introduced in March 2013 for mobile devices.Pandora caps monthly free tunes on mobiles to 40 hours — Tech News and Analysis . Gigaom.com (February 28, 2013). Retrieved January 17, 2014. However, this limit was removed once more in September of the same year.
In September 2016, a rewind function was introduced allowing users to replay a song. The updated streaming service also allowed users to skip an unidentified number of additional songs per hour if they opted to watch an ad. Previous to that, users were only able to skip six songs in an hour.
Device support Pandora apps are available for Android and iOS. Apps are also available for Apple Watch and Wear OS smartwatches. An app for the Pebble smartwatch platform was also available before that platform was discontinued. Integrations have also been offered with smart speakers. Support for voice control was added to the mobile apps in January 2019.
Business model In the three months that ended October 31, 2011, advertising comprised 88% of Pandora's total revenues;Pandora Media, Inc. "2011 3rd Quarter Report, SEC Form 10-Q." November 29, 2011. Retrieved December 2, 2011. that was reported as 80% in December 2013. RPM (revenue per thousands of hours) is determined based on CPMs (cost per thousand impressions). CPMs are largely dependent upon network effects and thus increase as a website scales and adds users. As such, Pandora's strategy in order to allow for widespread distribution was to offer a service unbundled from devices and transport. Pandora also works with system-on-chip manufacturers to embed its technologies on the chips they sell to consumer electronics manufacturers like Panasonic, Samsung, and Sony.
Pandora's cost structure is highly variable, with content acquisition costs representing roughly 50% of total costs. There are three main costs associated with content acquisition. First, SoundExchange collects content fees on behalf of labels or artists on the recording themselves. These are by far the largest content acquisition costs. Second, Pandora pays licensing fees to agencies such as BMI, ASCAP, or SESAC in order to compensate composers, songwriters and publishers. Lastly, Pandora also pays TiVo Corporation for song and artist information; this has recently been structured as a flat monthly fee.