Pandora’s Tim Westergren On From Competition to Interdependence #DMF

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Tim Westergren, chief strategy officer and founder of Pandora, was the keynote speaker at the Digital Music Forum West this morning. We interviewed Tim about a year and a half ago and at that time Pandora faced some real challnges.

In his keynote, Tim updated the audience on the current state of Pandora and his thoughts on the future of online radio.

Tim started his speech by observing the how the when you book a flight on Expedia you get a slew of other offers for hotels, cars, shows and even pedicures. He stated that their might be a lot of lessons for the music industry that can be learned from the travel industry.

The focus of his talk was “From Competition to Interdependence”. He observed that in the arduous discussions of royalties and the subsequent compromise everyone had to give to make it work for everyone.

Broadcast radio is a big guerilla in music. Of the 20 hours people spend listening to music each week, 17 are listened to on radio. Music will go as radio goes.

Artists and labels have organized themselves around the radio industry. All the effort goes into getting on the air.

Broadcast radio is gradually being replaced by online radio, driven heavily by the mobile revolution. This is changing the relationship between radio and artists.

In online radio, it’s much more democratic and inclusive thousands and thousands of artists can now be included.

And the money flows are changing too. The money broadcast radio collected from advertisers mostly stayed with the radio station. In contrast with online radio a large percent of the money flows through to the artist. Of the $40 million in revenues that Pandora collects a 75% will flow through to artists via royalties.

The industry structure is also changing as artist services are growing fast.

The missing piece has been scale. How do you get this new interdependence to work at scale?

Pandora is now starting to reach scale. Pandora now has 36 million registered users,
12 million mobile users, 65,000 new registrations a day and providing 2 billion hours of radio in 2009. This is an example of online radio starting to reach the scale tipping point where they attract national advertisers who want to reach large markets. This means that more and more money can flow through online radio to the artists.

He also sees a day when services like Pandora can become a really rich source of information to bands about who is listen to their music, what they listen too, where they are etc all provided via a dashboard.

Tim’s ultimate vision is to have 1 billion users listening to music on Pandora creating a global scale that provides lots and lots of money to artists.

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One thought on “Pandora’s Tim Westergren On From Competition to Interdependence #DMF

  1. I am also one of the consumer of the Pandora & as far as i know i am very happy with it’s service & really after hearing about the interview with Tim i have also taken some points in my mind to tell my friends about it1