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Pandora founder pursues bigger piece of radio pie.

DENVER: During a recent taping of the Comedy Central show "The Colbert Report," host Stephen Colbert took Pandora founder Tim Westergren to task for the name of his Internet radio service.

"Why Pandora " Colbert asked, reminding him that Pandora s box from Greek mythology released evil into the world. "Is that what the Internet is You click open the box and evil comes out your speakers "

"Surprises come out," Westergren responded, "and at the bottom of that box was hope."

To be sure, Pandora is full of surprises and hope. For almost 10 years, Pandora operated on the verge of collapse. In the early years, while it labored to build the Music Genome Project that powers its music recommendation engine, Pandora struggled to find both a business model and funding, to the point where it had to ask employees to work without pay for almost two years.

Then came the infamous March 2007 Copyright Royalty Board (CRB) decision that raised the performance royalty rates for Internet radio to a degree that Westergren said would put Pandora out of business. It led to a two-year fight to reduce those rates, culminating in a compromise reached last July.

Today, Pandora is for the first time on solid footing. It s about to reach the milestone of 60 million registered users and reported its first profitable quarter at the end of last year. At any given time, there are 500 simultaneous targeted advertising campaigns on Pandora, with 45 of the nation s top 50 advertisers spending money on the site. And the company is now expanding into automobiles and TV sets in an effort to turn Internet radio from the redheaded stepchild of the radio industry into a legitimate competitor.

"In the last year, I feel like we ve finally cracked the nut on how to effectively monetize a streaming radio service," Westergren says. "Our intention is to build a radio business that looks a lot like the traditional radio business, with a scalable mechanism for selling national and local advertising so we can do everything from big, branded national campaigns to local pizza joint specials. They can be delivered as graphic ads, as audio ads, as video ads. We re pitching big ad agencies who have historically bought broadcast radio and pitching them to shift that money to the Web."

This isn t mere bravado. Westergren, 44, may be the poster boy for the laid-back startup executive, but he s a passionate believer that Pandora will one day change the way the world thinks about radio. His town hall meetings with users nationwide typically draw hundreds of fans whom he quickly charms with his down-to-earth casualness and genuine enthusiasm. Yet as the CRB copyright dispute proved, he s not afraid of a fight. Taking on the terrestrial radio establishment may seem like tilting at windmills, but Westergren s fervor -- which president/CEO Joe Kennedy molds into a business plan -- has helped build a growing team of believers.

Pandora hired 70 of its 190 employees last year and plans to hire another 70 this year, 80 percent to 90 percent of whom will be in ad sales or sales support. Its largest office outside its home base in Oakland, California, is in New York, where a staff of 25 focus exclusively on sales and support, with additional offices in Chicago, Dallas, Los Angeles and other cities. For the first time in the company s history, its ad sales team outnumbers the music analysts that keep the Music Genome Project database up to date.

Muscat Press and Publishing House SAOC 2009

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Publication:Times of Oman (Muscat, Oman)
Date:Jul 18, 2010
Words:605
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