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POWER MOVE: Supported controversial legislation that could have reduced statutory rates Pandora pays for sound-recordings performance.
THE RUNDOWN: No matter how many new radio and subscription services appeared last year, Pandora Media continued to grow at an extraordinary rate. “We’re really in the ‘big scale’ category now,” says Tim Westergren, who co-founded the Oakland, Calif.-based Internet radio service as an offshoot of the Genome Music Project mapping similarities across different songs.
Listeners have never had so many options for free streaming music. IHeartRadio, Slacker and TuneIn are all potential adversaries to Pandora, while Spotify also launched a radio service. Microsoft debuted a new ad-supported service called Xbox Music, Myspace relaunched as a music discovery site, and even Apple is expected to launch its own personalized radio service shortly.
Yet Pandora is still growing both its active listener totals and listener hour figures as if impervious to competitive threats. Westergren believes it’s because no other firm has a relationship with listeners like Pandora does, thanks to the company’s policy of quickly answering emails and his own personal hands-on approach, such as attending 400 town hall meetings to guide users through their problems and concerns. “People view Pandora as human, and they feel a certain connection to it,” he says.
Still, all isn’t perfect for Pandora. Generating more than $380 million in revenue during its last four quarters, royalties have increasingly become a burden as the company tries to better monetize smartphone listening, which now accounts for about 70% of total listening hours. Last year, Pandora also supported controversial legislation that could have reduced the statutory rates it pays for the performance of sound recordings. The months ahead promise more legislative battles, more competition, more shakeout.