It may seem odd that Pandora was named after the Greek myth of the woman who opened a box from the gods and let out countless evil into the world. But in Greek the word means “all-giving,” “all-gifted,” or “all-endowed,” which makes a bit more sense.
When Savage Beast Technology, Will Glaser, Jon Kraft, and Tim Westergren set out to create their “music genome project,” the goal was to create a set of criteria that would filter out the “junk” from the radio while leaving only the stuff users liked. The project used 400 different criteria to tag and identify music, and their original plan was to license the tech to places like AOL and Best Buy and others.
This didn’t work, and the company struggled to achieve profitability as a result. They switched back to making custom radio stations and changed their name to Pandora. And so the service was born.
As of the last reported numbers in 2013, Pandora has 200 million users, 70 million of which are active in a given a month. The company went public in 2010, where at $16 a share it was given a valuation of $2.6 billion. Pandora makes 88% of its revenue from in-app ads, namely audio that plays during the breaks of songs.
Pandora has dramatically changed the music industry by allowing free access to hundreds of thousands of songs and artists. But in doing so they have to jump through many legal hoops in order to operate. Content acquisition accounts for about 50% of their costs, and it comes with certain stipulations.
Legally, Pandora cannot allow users to rewind or replay a song. They also have to limit the number of “skips” a user is allowed, so someone isn’t just infinitely skipping to find the one song on their station they like, thus destroying the “randomness” of the radio. The number of allowed skips has been highly variable over the years, and is still changing to this day. Also due to licensing restrictions, only one song is available per album at a time.
Pandora has a great many competitors in the internet radio space, even if they were one of the first. Now, Pandora competes with Grooveshark, iHeartRadio, Rhapsody and Spotify. But Pandora’s “music genome” is what they believe sets them apart from their competition. Here’s Pandora’s Tim Westergren speaking about how it works to the WSJ:
” Without the right word choice for describing the parts of a song our business wouldn’t have worked. We try to break down every dimension of a song to its most basic building blocks—like melody, harmony, rhythm, instrumentation, vocal performance. Vocal performance gets probably 30 attributes. Tom Waits is a gravelly baritone, with almost no bravado. Beyoncé, she’s an alto with bravado galore.”
Pandora has music analysts working around the clock to “catalog” new music to expand their collection of music to new songs, artists and albums. Westergren seems to believe that companies like Pandora will kill traditional radio someday, because they’re far too limited in scope.
“It’s natural. That’s what they have to do to stay in business. The pop music world is about convincing people that’s how you belong, that’s how you are cool. People are insecure about their musical taste because of the music industry. The broadcast world is essentially a one-playlist world. Radio can run only one playlist at a time.”
Pandora has changed the landscape of music, and is looking to continue to do so well into the future. They’ve opened up a box, but what’s come out has altered the word for the better.
[Photo via Getty Images]
