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Disclosure: Midem paid for my hotel and travel to the conference where I served as a judge for a startup-pitching contest.
Making one of his biggest public appearances since returning to Pandora as CEO, Tim Westergren struck a defiant tone — insisting that the company is not for sale and is, in fact, on the cusp of a reinventing itself.
“We are on a path to doing something big and something for the long-term,” Westergren said when asked on stage about sale rumors. “That’s why I got back in the saddle, so no plans for that.”
Westergren was being interviewed this past weekend at Midem, a music industry conference held in Cannes, France. His appearance comes three months after he returned as CEO of the company he founded, replacing Brian McAndrews, who served in the role from 2013.
Pandora, with its Internet radio format, has been a music streaming pioneer. Founded in 2000, it survived the dot-com bust and enjoyed explosive growth following the introduction of the iPhone in 2007 and the ensuing rise of the smartphone era. Pandora’s success was capped by a big IPO in 2011.
But as a public company, Pandora has struggled to show consistent profits and growth. It is often buffeted on one side by artists who claim they are not being paid fairly and on the other by new entrants such as Spotify, Apple Music, and Amazon, who offer on-demand streaming services.
The company’s stagnation has led to rumors that Pandora might be for sale. In an effort to quash that idea, Westergren detailed his vision for how Pandora will evolve.
Currently, Pandora relies on its music database, known as the Music Genome Project, to create radio stations that are tailored to a listener’s preference — based on an artist or style of music. Most users listen to the ad-supported version, but a smaller subset subscribe to Pandora’s premium service, Pandora One, which has no adds and allows users to skip more songs.
Westergren noted that Pandora has catered to the “lean back” experience, one which allows you to just switch something on and let it go. Yet Pandora understands that when people want to hear a song again or dive deeper into an artist, they leave the service and jump to YouTube or Spotify.
So the company is trying to keep these types of active listeners (and monetize them) by building a hybrid service using the assets that it acquired when it bought Rdio last year for $75 million. The goal is to develop a subscription that costs less than the standard $9.99 that Spotify and others charge for their ad-free, on-demand services.
“We think there are some people who will pay less for fewer features,” he said. “That’s our working thesis.”
He argued that part of Pandora’s advantage will be the learning it has done through the Genome project. Westergren says Pandora will offer a vastly superior music discovery and personalization experience than most on-demand music services, which he described as: “30 million songs and a search box and good fucking luck.”
He also responded to claims that Pandora’s business model was unfair to artists. Westergren noted that in the U.S., traditional radio does not pay any royalties to artists, so every listener who migrates to Pandora is increasing revenue for music creators.
“Every 1 percent of market share that moves from broadcast radio to Pandora creates an incremental revenue of $60 million a year to the industry,” he said.
At the same time, he understands the frustrations. He blasted services like Spotify that offer unlimited, free, ad-supported on-demand services, because he feels they’re teaching people that music should be available for free.
“What drives me crazy is there is a substantial part of the digital music world that is educating listeners to believe that they can get music for free, and for free on demand.,” Westergren said. “It creates bad habits.”
You can see Westergren’s entire talk here:
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