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Pandora Is Ready To Overtake Apple And Spotify In 2017
#1
[Image: 3058719-poster-p-1-pandora-ceo-newsy.jpg]

In 2016, personalized Internet radio alone won't cut it. Here's how Pandora hopes to maneuver its way to profitability.

For somebody who just got off of a red-eye flight across the country at six this morning, Tim Westergren seems strangely energized. Perhaps it's adrenaline. But it would be hard to blame him if there was a shred of terror in there, too. Two days earlier, Westergren had suddenly found himself with a new job: chief executive of Pandora, the Internet radio company he cofounded 16 years ago.

https://www.fastcompany.com/3058719/most...ple-and-sp
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#2
Plenty has changed since the early days. After inventing personalized Internet radio as we know it, Pandora amassed more than 80 million users, went public on the U.S. stock market, quarreled with the music industry, made up with the music industry, acquired a few music startups—and integrated its radio service into 1,700 types of devices along the way.
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#3
But there are some notable things Pandora has not done. It hasn’t become a hugely profitable company—most financial quarters, it reports a loss—and its core product has not changed all that dramatically, even as on-demand streaming has taken hold and competition has heated up. In the coming months, Pandora is getting ready to make some major changes to its product and business model—and it's praying that it all pays off. That’s why Westergren flew to New York from California this morning. The task ahead of him is hugely challenging—not to mention urgent.
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#4
"It’s crystal clear to me what I should be doing," says Westergren, who replaces Brian McAndrews, who suddenly left the company in late March after two and a half years as CEO. "Both why I should be doing this as a job in the first place and what the most important things to tackle are."
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#5
During his first week on the job, Westergren’s focus was on "rallying the troops" internally and meeting with two of Pandora’s most important constituencies—record labels and investors. Before this New York jaunt, he was in Los Angeles meeting with music label execs and artists. Before that, he hosted an all-hands meeting at the company’s headquarters in Oakland, unveiling a new org chart with his name at the top and refined roles for other members of the top brass.
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#6
"I can’t remember the last time I slept a decent night’s sleep," Westergren says between bites of a sushi lunch that seems like it barely snuck into his packed afternoon. "But I’ve never been more fired up than I am now."
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#7
That’s good, because Westergren has his work cut out for him. In 2015, the company failed to grow its audience beyond the 81 million listeners it had at the beginning of the year. And while it pulled in $1.16 billion in revenue last year, it was still $170 million short of profitability, thanks to its stubbornly huge, federally defined music licensing costs. Those fees, which don't apply to terrestrial radio or on-demand music services like Spotify, eat up roughly half of Pandora's revenue, making it hard to consistently turn a profit. The company may even be looking to sell itself off, according to a recent report in the New York Times. Even with Westergren now at the helm, that option may remain on the table—the company hasn’t officially commented on that. But right now, he seems sincerely hell-bent on breathing new life into this thing he helped build so many years ago.
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#8
"There’s something about having been here from the very beginning," says Westergren. "I know how everything is stitched together. I know how things work. Why we do things. Where our weaknesses and strengths are."
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#9
Even before its unexpected CEO swap, Pandora was busy charting a new course. Late last year, it acquired the remains of struggling Spotify competitor Rdio, concert ticket seller Ticketfly, and Next Big Sound, a startup that tracks music online and offers detailed analytics to artists and labels. The acquisitions signaled a two-pronged strategy: Turn Pandora into a more comprehensive, Spotify-esque place for listening to music, while also making it a more valuable (and hopefully lucrative) resource for musicians. The time line on launching these new initiatives, Westergren assures me, has not changed, although like any executive operating in the ever-fluctuating digital music space, he’s hesitant to give exact dates.
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#10
"We want to be a one-stop shop for artists and for listeners," Westergren says. "And all that activity will turn into a set of businesses." And crucially, those businesses won’t all be eaten at by the same fixed (and very costly) royalty payments that Pandora's radio product endures. That isn’t to suggest that profits will explode once the switch is flipped, but if all goes according to plan, Pandora is hoping its road ahead could be a bit less bumpy.
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