But 20 years ago, the music industry was in a far different position. Physical sales accounted for the vast majority of revenue and music labels controlled the distribution model.
The iPod and Napster would change the course of history in 2001, as millions of people found new ways to own music, either through £1 single purchases or illegal torrents.
In a small apartment in San Francisco, Tim Westergren and Jon Kraft were also attempting to use infuse the music industry with technology. They had assembled a team of engineers and musicians to build a recommender system for music, called the Music Genome Project, which would “capture music at its most fundamental level” through over 450 attributes to describe a song.
Even though the system worked, Pandora (originally called Savage Beast Technologies) spent four years attempting to license the technology to AOL, Best Buy and the music industry. Nobody wanted anything to do with it, so in 2005, Pandora launched its own discovery service on the web.
The original concept of Pandora has stuck with it, a discovery tool for new music, alongside stations that are tailored to a user’s interests. Some things have changed, Pandora now uses artificial intelligence to categorise songs, instead of the 75 musicians it used in 2005 to catalogue thousands of songs.
Pandora’s key advantage in the early stages was its recommender system, which has been imitated by Spotify and Apple Music. Most music operators at the time either offered a library without any recommendations or basic radio, Pandora combined both but also made personalisation a key part of the app.
Five years after launch, Pandora reached 40 million monthly active users. The launch of the iPhone and Bluetooth car radios was critical to the company’s growth, and Pandora was quick to build applications for whatever platform looked promising at the time.
However, as with most streaming services, is struggled to make a profit. In the 15 years of operation, Pandora has never reported a profit, despite year-on-year revenue growth since 2009. As with all music streaming platforms that rely primarily on advertisements, it struggled to generate enough revenue from each user to cover licensing costs.
As hours streamed ballooned to 21 billion a year in 2015, Pandora’s losses steadily climbed, reaching $169 million in the same period. Pandora acquired Ticketfly for $450 million and Rdio for $70 million in 2015, in an attempt to broaden the business and perhaps make it profitable.
Both attempts were unsuccessful. It sold Ticketfly to Eventbrite for a $200 million two years later. Rdio’s engineers were brought in to build Pandora’s premium service, but in 2019 it only counted 6.2 million subscribers, far less than Spotify (124 million), Apple Music (68 million) and Amazon Music (55 million).
In 2019, satellite radio broadcaster Sirius XM acquired Pandora for $3.5 billion.
Pandora has since launched Stories, a marketing tool similar to Genius’ Behind the Lyrics, in which artists can give narrative and deeper insights into tracks. It also announced a new podcasting service, which will use a new recommendation engine called the Podcast Genome Project. A series of podcasts on Marvel’s Avengers superheroes is scheduled to launch later this year.
Revenue has continued to climb slowly upward since the Sirius XM acqusition, while monthly active users have dropped from a high of 81 million in 2016 to 63 million in 2019.
We have collected data and statistics on Pandora’s revenue, profit and usage. Read on below to find out more.
|Launch date||November 2004|
|People||Roger Lynch (CEO), Aimée Lapic (CMO), David Gerbitz (COO), Chris Phillips (CPO)|
|Parent company||Sirius XM Holdings|
Note: Since Pandora’s acquisition, SiriusXM has not publicised losses.
Pandora Monthly Active Users
Pandora Paid Subscribers
Pandora Yearly Music Streams (Hours)
Note: Pandora has not released this stat since 2017, possibly due to the negative effect publishing it in 2017 had on its stock price.
Pandora other key stats
- Over 10 billion stations have been created on Pandora (Pandora)
- Yearly streams reached a peak in 2015, at 418 billion (Music Business Worldwide)
- The average Pandora user listens for two hours, 15 minutes per day (Radio Today)
- Despite losing monthly average listeners, Pandora has continued to make more revenue through a more engaged user-base and its growing premium subscription
- Pandora’s largest acquisition was $450 million for Ticketfly in 2015 (Music Business Worldwide). Two years later, Pandora sold it to Eventbrite for $200 million.
- It also acquired Rdio a month later for $75 million.
- During a two year period between 2014 and 2016, Pandora saw a $5 billion drop in market value, forcing the then-CEO Brian McAndrews to resign (Music Business Worldwide)
- It takes an artist on average 752 streams to make a dollar on Pandora, more than Apple Music (136), Deezer (156) and Spotify (229), but half as much as YouTube (Visual Capitalist)
- 25 percent of Americans use Pandora Music
- Pandora’s largest age demographic is 25 to 34 year olds, followed by 18 to 24 (Statista)
- Earned It by The Weeknd was the most popular track of the decade, followed by Someone Like You by Adele and See You Again by Wiz Khalifa (ft. Charlie Puth) (Hello Giggles)
- Drake and Eminem have dominated most states in cumulative streams for the past few years (Business Insider)