As Chief Technology Officer at Pandora, Tom Conrad has led product development for the dominant Internet radio company since its inception nearly 10 years ago. Since then, the company has grown to occupy 8% of all radio play and 134 million registered users. But it’s now at a crossroads as it attempts to keep costs down and increase revenue on the all-important mobile side. We caught up with Conrad a day after his talk at SXSW to talk about Pandora’s new mobile streaming cap, the status of the controversial Internet Radio Fairness Act and his vision for a future of Pandora that allows group listening.
You guys cited the relative weakness of mobile ad sales in your recent decision to put a cap on free mobile streaming. But at the same time, your mobile revenues have increased something like 100 percent year over year. Is there a number or percentage point you’re looking to hit before you feel comfortable going cap-free again?
It’s probably too early to say. We’re looking to make revenue-per-hour on mobile— which is the way we have to look at it because our content costs are on a per-hour basis— a clearly profitable endeavor. But we also remain very, very committed to growing overall listening to Pandora. So as we’re confident that we can monetize the hours we have, we can start to loosen up things like the cap. It’s just a new lever for us to have control over the cost dimension of our business, which is so dominated by the content acquisition side.
Are you confident that you’re on a path to loosening that up? In a year’s time? Two years’ time?
Well I can’t speculate on the timeline, but I think we’re definitely on that path. As you say, we’re seeing strong quarter-over-quarter and year-over-year growth, so I think we’ve turned the corner on mobile monetization. So I’m confident that this will be just one chapter in a much longer story.
You’ve said that Pandora is basically a mobile company now, that that’s how most users are listening to the service. Are you happy with where the mobile experience is? Are there any new platforms that you’re interested in?
I’m really proud of where we’re at in mobile, particularly where we’ve come since last year. We’ve had tremendous success on both iPhone and Android, where we’re consistently in the top two or three most downloaded applications. But my own appraisal of what we were delivering was that it was a great listening experience, but the level of fit and finish, the level of feature parity between the platforms, and the overall gestalt of the experience was not where I wanted it to be. So we spent the last year working really hard to get a beautiful, fast experience on both Android and iPhone with a consistent set of features across both and parity with the Web. We’ve also announced that we’re coming to Windows Phone, so we’re looking forward to the day when we can start reaching those users as well.
I wanted to get an update from you on the Internet Radio Fairness Act. Are you guys still working on that bill? Do you think it will get picked up in this new session?
Well, as you know, the bill that was introduced last year came to its natural conclusion when we transitioned to a new Congress. The expectation would be that lawmakers would reintroduce a similar bill sometime this year.
Some opponents of the bill, including Neil Portnow of the Recording Academy, have already called it dead. Realistically, is it dead?
Well it’s up to Congress to move these kinds of things along, but my sense is that there’s still an interest in the topic of fundamental fairness as it relates to licensing for different kinds of radio services. So it’s not my sense that it’s dead, no.
One of the interesting things you talked about in your panel was the idea of making Pandora work for groups. How big of an opportunity is that and what are the challenges there?
Pandora is fundamentally a personalized experience— our job is to find the perfect song for you to listen to that you’re going to love, and simply that. But there are those instances where you’re with multiple people, whether it’s as simple as being in the car with your family or at a party. So I think the idea, especially in today’s environment when we all carry these little devices with us that can communicate with the Pandora infrastructure, would be to have something like a big screen television that would be the interface and do the music playback.
It’s just something that’s fun to think about as we look into the future. How do you customize a listening experience for a group, rather than an individual? There’s some technical challenges that go with that, everything from identifying who’s in the room to interpreting conflicting feedback about a song that’s playing. So those are some interesting things to wrestle with.