Plenty of ad-supported music services have come and gone over the years, while others struggle to balance music-licensing payments with ad revenue. Interactive radio service Pandora, meanwhile, teeters on the edge of profitability in anticipation of an IPO that could reach the $1 billion range.
(By “teeters,” I mean that Pandora has had at least one profitable quarter, but that its S-1 form indicates that it “has not in the past generated, and may not in the future generate, sufficient revenue from the sale of advertising and subscriptions to offset such royalty expenses.”)
When asked how Pandora manages to cover music licensing costs with advertising sales (in addition to its $3/month ad-free Pandora One subscriptions) during a panel at the Rethink Music conference on Tuesday, the company’s CEO and president Joe Kennedy credited his company’s large advertising department.
“Advertising is a product, the way the user experience is a product,” said Kennedy, adding that Pandora has “a tremendous team… probably 170 people who work in ad sales and support.”
In late 2008, Pandora sadly reduced its overall headcount from 140 to 120, so news that it currently has 170 employees working on advertising alone indicates how rapidly the company has expanded in the past couple of years.
Pandora, available in the United States, currently claims over 80 million registered users (at least 30 million of whom access the service at least once per month) and says a new user signs up approximately once every second.
At that rate, it would sign up an additional 31,514,400 people in the next year, or another 10 percent (approximately) of the United States’ population.