Panel: 'How Pandora Navigated the Smartphone Seas'
Participants: Tom Conrad, CTO at Pandora; Mark Phillip, Are You Watching This?!

Competitors and aspiring startups can look to Internet radio station Pandora to see how a company redefines itself, perseveres and adapts to changes in technology. CTO Tom Conrad sat Monday for an afternoon session at SXSW.

Why You Should Care:
Pandora pioneered personalized radio and was the first to achieve a sustainable user base. Its iPhone app, released in July 2008, was an immediate game-changer for mobile music. Since then, Pandora has leveraged its mobile presence to expand its user base. The company ended February with 48 million registered users and 20 million on mobile.

The Takeaways:
Identifying opportunity
Conrad on the beginning of Pandora: “Our CEO had a keen insight. We were looking at how people consume music in the U.S. People listen to about 20 hours of music a week. It turns out that 17 hours of that 20 comes from radio…It seemed like there was a tremendous opportunity to use the Internet to deliver something like radio so it’s very simple, it’s serendipitous, it’s discovery oriented. You press a button and music comes out. There’s very little work.” From 2004 to 2005 the company built Pandora and launched in November 2005. “It took off like a rocket,” he said.

Partnerships to get the ball moving
People don’t listen to music sitting in front of a computer. About half of listening is on the go – in the car, while jogging, etc. If Pandora was going to compete with major players, it needed to break free from confines of the PC. Started working with Spring and AT&T to roll out Pandora on mobile phones. Initially, growth was slow on mobile. “It’s not as simple as being on lots and lots of phones.”

Apps
The iPhone app was an instant, runaway success. Other mobile platforms came later. Conrad said the company considered Blackberry to be an underserved category and spent four months on the Blackberry app. It was launched in January 2008. Building an app for Blackberry is tough, Conrad said, but the size of the market made it worth it. “We still have millions of listeners on the Blackberry.” Palm was an enthusiastic partner. Later, Pandora launched an Android app. Adoption through Android has been “absolutely remarkable” and may actually rival that of the iPhone app, Conrad said. “It’s a much easier platform to support than Blackberry.”

"If you want ubiquity..."
Conrad believes Pandora will generate more revenue from advertising than through a paid model. It can gain 10 to 20 times more users if it offers a free version, he said, than if it offered just a free version. “If you want ubiquity, advertising-supported is the way to go.” In addition, he said Pandora believes it can be profitable at around 90 seconds of advertising per hour due to its highly targeted advertising. “That’s a bit unproven, we’re working on that dimension of the business.”

What’s coming
Pandora is committed to support Windows Phone 7. “I’m really, really impressed with what Microsoft is doing,” he said. He pointed to the user experience and the fact that Microsoft is starting with a clean slate with its newest mobile platform. “We’ll be there in the fall when they launch.”

Billboard.biz Panel Rating?
Three of four! Some instructive lessons for other businesses and good for historical knowledge.


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