Careers at Pandora Media

Mission

Pandora is a publicly-listed online radio provider. It operates a music streaming platform that provides an automated music recommendation service to its users, playing musical selections based on artist selection.

History

Pandora was founded in 2000 by Will Glaser (“Glaser”), Jon Kraft and Tim Westergren (“Westergren”), originally under the name Savage Beast Technologies.

The founders aimed to create a personalised online radio service that played only the music a user enjoys. They began developing the Music Genome Project technology, on which the Pandora service would be based, with Glaser leading the technical side with musical contributions from Westergren. They created 400 specifications for every song which is then compared to the listener's preferences in order to suggest other songs or artists with similar characteristics. The founders initially attempted to generate revenue by licensing its technology to third parties such as AOL, Tower Records and Best Buy. This, however, did not prove profitable, so in 2004 they returned to their original vision and began developing a consumer-focused online radio platform.

Pandora went live in 2005, initially as a paid-only service until advertisements were introduced later. Having already raised more than $56 million from investors, including Greylock Partners and Selby Venture Partners, Pandora went public in 2011, in a $234.9 million initial public offering on the New York Stock Exchange. At its closing price in 2011 Pandora had a market value of $2.8 billion. It currently has a market capitalisation of $2.42 billion.

Benefits at Pandora Media

Business model of Pandora Media

Customer Segments

Pandora’s music streaming platform serves two principal customers segments: general consumers and advertisers. The service attracts users who wish to have an automated stream of music tailored to their tastes or who wish to discover new music based on their current preferences.

It is currently available only to users in the US, Australia and New Zealand. A recent poll found that, of Pandora’s 80 million active monthly users, approximately 45% were aged between 13 and 29, while users aged between 35 and 44 accounted for the largest single share of users with 21%. Pandora also sells a range of advertising solutions to agencies and brand marketers. The Company has provided advertising solutions to companies across a range of sectors, with customers including Taco Bell, Esurance, Fabletics, Activision and Kellogg’s.

Value Propositions

Pandora’s principal value to consumers is that it provides a music streaming service free of charge. It has access to a broad library of music, including current and historical content, and provides automated, tailored streams to its users based on their personal listening habits. The platform also automatically identifies tracks with musical similarities – including melody, rhythm and instrumentation – to music the user has already liked, providing an ongoing music discovery service.

For advertisers, the Pandora platform provides access to a captive audience of more than 80 million active monthly users. The Company provides localised and targeted advertising solutions, making it easier for brand marketers to connect with their target audiences.

Channels

Pandora’s music streaming service can be accessed via its mobile and desktop websites at www.pandora.com. The Company also provides mobile, tablet and desktop apps for Android, iOS, Blackberry and Windows. Additionally, Pandora has developed integration with a range of devices – including games consoles, home audio devices, televisions, set-top boxes and streaming players – as well as car models, through which Pandora can be accessed directly.

Customer Relationships

The Pandora platform is available to users free of charge and on a self-service basis through the Company’s website. The Company’s streaming service is available without registration, requiring no interaction with Pandora representatives. Registered users, however, can begin to create personalised streams and benefit from the platform’s automated music discovery service, which enables users to discover new music without having to make searches themselves. Users can also upgrade for a premium account on a self-service basis.

Advertising customers must contact members of the Pandora sales and marketing team in order to discuss the Company’s various advertising solutions directly. Pandora keeps its customers updated with platform developments and provides reporting on the music industry through its blog.

Customers can also interact directly with the Company through its Facebook, Twitter and Instagram accounts.

Key Activities

Pandora develops and manages a music streaming platform and automated music discovery service. It allows users to listen to personalised online radio stations based on a user’s artist preferences, and is available across a range of devices and integrated platforms.

The Company also provides a range of advertising solutions to brand marketers and advertisers, including audio, display and video products, and premium native advertising, sponsorships and branded content.

Key Partners

Pandora collaborates with integration partners and content providers. The Company claims to have more than 1,000 partner integrations making the Pandora platform accessible across a number of automobiles, automotive aftermarket devices and consumer electronic devices. This includes set-top boxes, games consoles, cable and satellite providers, blu-ray players and televisions provided by companies included LG, Sony, Yamaha, Panasonic, Xfinity and DirecTV.

Pandora also maintains partnerships with content providers. It launched a partnership with independent music rights group Merlin in 2014, with which it negotiates royalty rates directly instead of paying compulsory rates set by the U.S. government, and has collaborated with podcast provider This American Life which now has its own channel on the Pandora platform.

Key Resources

Pandora’s key resources are its technology and software platform, its music partnerships and content, its IT infrastructure and its personnel. The Company’s automated music discovery service is powered by its proprietary technology that stems from its Music Genome Project.

It has two patent applications filed with the US Patent and Trademark Office for ‘Internet radio and broadcast method personalized by DJ’ and ‘Internet radio and broadcast method with selectable explicit lyrics filtering’.

Cost Structure

Pandora incurs costs in relation to the development of its software platform and technology, the maintenance of its IT infrastructure and the retention of its employees. The Company’s largest cost, however, concern its payment of royalties to artists and studios. In September 2015 it was reported that Pandora had paid a total of $1.5 billion in royalties since its launch, and had paid $500 million in just the last year.

Revenue Streams

Pandora’s principal stream of revenue is advertising, accounting for a reported 81% of the Company’s total annual revenue of $933.3 million in 2015. The Company provides audio, display and video advertising solutions to advertisers and brand marketers, across all supported platforms: mobile, tablet, desktop, connected devices and connected cars. The Pandora platform also collects user data so that advertisements can be targeted more effectively.

Pandora is estimated to show approximately seven display ads per hour and play around 2.5 audio ads per hour. Ads are priced on a cost per impression basis, with ranging from 4% for a basic display advertisement to $25 for a large video ad. Additionally, Pandora offers premium solutions such as branded radio stations, sponsorships and native advertising. Pandora also generates revenue through the sale paid-for subscriptions. Users are able to access a premium, ad-free version of the platform for $4.99 per month or $54.89 paid annually.

Our team

Tim Westergren,
Co-Founder and Chief Executive Officer

info: Tim Westergren has served as Pandora’s Chief Executive Officer since co-founding the Company in 2000. He is also an advisor to Futures Music Group, which creates and teaches a music curriculum to students at an elementary school in Oakland. Westergren himself is a musician. Following his graduation from Stanford University in 1988, he began working as a nanny while he pursued a career in music. He simultaneously began working as a film score composer, composing music for independent films and plays, which led him to create Pandora. Between 1990 and 1999 Westergren was also pianist for US rock group Yellowwood Junction.

Sara Clemens,
Chief Operating Officer

info: Sara Clemens has been Pandora’s Chief Operating Officer since 2014. She began her career in 1995 as a policy advisor on broadcasting and telecoms at the Ministry of Commerce in New Zealand. She was appointed Commercial Director of Interconnect at Telecom New Zealand in 1996, where she stayed for four years before joining Cable and Wireless Global in in 2000 inits Commercial Development Division. Between 2002 and 2003 Clemens was Head of Technology Sourcing at mobile operator Hutchison 3G, returning to Telecom New Zealand in 2003 as its Head of Partnerships, New Media and Business Development. She left Telecom New Zealand in 2007 to join Microsoft, where she held senior management positions, including General Manager of Interactive Entertainment. Before joining Pandora, Clemens held executive roles at LinkedIn and Greylock Partners.

Chris Martin,
Chief Technology Officer

info: Chris has served as Pandora’s Chief Technology Officer since 2014. He first joined the Company in 2004 as it Director of Software Engineering, later serving as Vice President of Engineering. Prior to joining Pandora, Martin held several quality assurance and engineering roles. He served as a quality assurance manager at tech company Quintus from 1997, before taking on the same role at software company Kenamea in 2000. He was appointed Kenamea’s Director of Engineering Services in 2002, a position he held for year before leaving to join music technology company QRS as its Director of Quality Assurance.

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