Rishi Mirchandani spotted something in Pandora’s publicly-released data that bears repeating: While smartphone listeners are responsible for a massive surge in the service’s usage, they could be costing Pandora money — so far, anyway (see below).
As you can see from the chart to the right, Mirchandani, making a couple assumptions (that 7.5 percent of Pandora’s ad revenue is mobile, and basing subscription revenue on listener hours), appears to have parsed the earnings information Pandora made public as part of its IPO filing.
He determined that while Pandora is in the black on web-based listening (where you get a big full-screen ad in addition to frequent audio ad interruptions in the free version), it’s in the red when it comes to mobile — and mobile is where the growth is.
When contacted, Pandora couldn’t comment on this due to the quiet period before its planned IPO, but it’s an interesting assertion. If it’s true, Pandora needs to figure out a way to make all that mobile usage pay, which shouldn’t be that hard, giving the clear advertising potential of location-aware music services.