Pandora’s new boss is the same as its old boss. Founding CEO Tim Westergren is back as the Internet radio company’s CEO after Brian McAndrews’ two-and-a-half-year run. (Head here for Billboard's look at what happened behind the scenes.) Now the growing yet unprofitable music streaming company is hoping Westergren will help Pandora evolve from a company that serves advertisements into a music company run by music people for music people.
Westergren is the long-time evangelist, the face of the company whose name undersigns both customer emails and company blog posts. Now he has even more proselytizing to do. “Motivating the team,” he tells Billboard. “Inspiring the internal leadership. Equally important is being a voice for us outside the business.”
If ever Pandora needed an emotional lift it’s now. Monthly visitors have stalled at 80 million. Second-place (and bit of an apple to Pandora's orange) Spotify has halved Pandora’s lead in monthly listening sessions over the past year, according to Triton Digital. Competition has further stiffened with launches from Apple Music, SoundCloud and Tidal in the last 12 months.
Now is a good time for Pandora to return to its roots. It doesn’t see itself as just an advertisement-selling Internet radio company. That’s not the image it wants to project. Instead, Pandora sees itself as a vital link between listeners and artists. It believes it’s a productive member of music’s creative class with Westergren as its artist-in-chief.
Billboard: Brian helped build the ad sales team and better relationships within the industry. I’m wondering how your second tenure as CEO will be different?
Tim Westergren: I think about this in a couple different ways. One is internal. Motivating the team. Inspiring the internal leadership. Equally important is being a voice for us outside the business. With regards to the music industry, I think you’re right, the attitude has changed a ton. That has been driven bottom-up largely by the “music makers” group. That’s creating a lot of good will up to the labels.
The thing about me being involved is I’m a musician. That really matters in the relation between your business and the industry. So when I get in front of whoever it may be, I think they know my intentions are noble with Pandora. I want Pandora to be a model of real collaboration between a digital company and artists and labels. I think that really matters.
I will [also] put a lot of effort into music industry relations. That will be a big emphasis part for me. And being more engaged in general across advertisers, business partners, certainly with investors. So telling our story much more loudly, more actively.
You’ve done grass-roots marketing in the past. You were doing town hall meetings years ago. But what evangelism can you do on a larger scale and to an external audience?
Well, there’s still a role for me to play there.
One is through the product. On platform product marketing. Creating new features people love and making sure listeners find out about them and they’re properly presented to them. That’s part of the way we’ve changed the organization. We’ve put growth and retention and marketing into the product organization so they’ll be married. So the same people that are building the products are going to be responsible for the adoption of them. Keep in mind, we have 100 million people a quarter that use Pandora. That’s a massive audience and the most efficient way for us to market new things to and grow listenership.
The second is we’re going to be much more proactive on the marketing side. We haven’t historically spent a lot of money on consumer marketing and that’s going to change as well.
Are you still on a path for a launch of the subscription service by the end of the year?
That’s the ambition, yeah.
We keep churning on our core business, which is the ad-supported radio business. But we’re stitching into that a more lean-in on-demand piece that we think will have multiple layers to it. It will upsell our existing audience into those products. So, some increasing level of on-demand up to a full-blown subscription product.
And then the ticketing piece. We’re integrating ticketing into the product. It’s the same thing. You lower that over our 100-million-people-every-three-months audience and it becomes a source for relevant, targeted event/entertainment and a great attractor for an audience. And within this is a marketplace with musicians. Musicians are in this, interacting with listeners, talking with them, promoting albums.
It seems like you’re in unchartered waters putting such tools in the hands of artists hoping it drives revenue ultimately. Tell me how that’s gone so far.
Unchartered but not totally. We’ve been beta-testing this for a long time with artists. We’ve done one-offs and trials with artists. One early, fascinating thing. You know about the artist audio messaging system we have now, right? The engagement rate is off the charts. We know now definitely that if you put the right message targeted to the right way you get a real high engagement rate.
You’re right that we haven’t proven the business. So what will it do it in terms of commerce? But we have a lot of reason to be very confidence we’re going to be effective at getting people to lean in and engage and ultimately transact more because of this whether it’s buying a ticket, buying music, or whatnot.
Is Pandora a U.S. webcasting company or U.S. company with international aspirations?
Our ambition is to be a global business. The U.S. is the best country to start with. It’s 40 percent of the market. We are the absolute leader here. Our reach is completely unrivaled. So it’s a launching pad for us to go places. I don’t think our idea is to blast out everywhere right away. But we have this great core business and we think it will lay on top of other core markets and we’ll do it extensively, but the U.S. is the perfect platform for launching internationally.
News reports about Pandora pursuing its strategic options weren’t all that surprising given digital music’s tough economics. With the changes in the executive ranks, is a sale now off the table?
We have never been more committed to our long-term growth strategy.
Do you plan on holding onto KXMZ [in Rapid City, South Dakota]?
What do you plan to do with it? What’s the value to Pandora?
I think we’ll see. It’s a profitable business. There’s an interesting synergy between online and offline radio. It’s not a focus for us right now but no reason to make any moves there.