Pandora’s Box

Pandora’s Box
by Adam Perry for Boulder Weekly
7/23/09

It’s a fun experiment: sit in a café (with Wi-Fi) anywhere in America, go to Pandora.com to punch the name of a current artist from that area into Pandora’s revolutionary “musical genome” service, and see where the audio journey ends up while you surf the net. Earlier this week, I was in Portland, Maine and began a Pandora trip with Providence, Rhode Island’s country-rock sensation Deer Tick, which took me to Bright Eyes, the Strange Boys, Zee Avi and countless other arguably similar acts. By typing the name of a band I love into Pandora, I instantly and easily had a free soundtrack to my work-day that not only lifted my spirits and made me feel more in tune with my temporary surroundings but also introduced me to a bunch of new groups who I then proceeded to check out in depth.

Pandora’s (lucky) staff listen to a seemingly infinite number of songs and assign each one “characteristics” – such as tone, texture, male/female vocals, types of harmony, etc. – that determine whether they fit with Pandora users’ tastes. If I worked for Pandora, which was started by former movie score composer Tim Westergren in 2005, there’s no way I’d lump in the emo-indie of Bright Eyes – twice in four songs, no less — with the mighty Deer Tick, who masterfully juxtapose the influences of Hank Williams and Pavement; regardless, it’s clear why Pandora is an enjoyable phenomenon across America, one that’s made waves with everyone from poor college students to lawyers. It’s a music geek’s dream and a music journalist’s cherished resource.

Walk through any computer lab on the CU or Naropa campuses and you’re likely to see at least one student using Pandora, where listeners can create “stations” based on beloved artists, genres or even just songs, and also cross-pollinate stations for more variety. However, the legality of Pandora and other internet radio websites was questioned by the federal government over the past few years; leading up to the highly-anticipated Copyright Royalty Board ruling earlier this month, it wasn’t known whether internet radio could even afford to exist anymore. Westergren was quoted several times as saying Pandora was “on the verge of collapse” as the ruling neared, but the outcome was enough to make Westergren gush publicly on the company’s website:

“For more than two years now I have been eagerly anticipating the day when I could finally write these words: the royalty crisis is over! Pandora is finally on safe ground with a long-term agreement for survivable royalty rates.”

According to a short interview with Westergren on Monday, the royalties Pandora must pay artists played on their website is incredibly small.

“We pay about $.02/hour,” Westergren said. “And not a single artist has EVER asked to be pulled from Pandora, except one who’s [sic] music had changed and felt his earlier records no longer reflected his sound.”

Under a controversial 2007 ruling, the Copyright Royalty Board (or “CRB”) expected internet radio stations to pay about $0.20/performance to artists played on their websites, which NPR called a “stunning, damaging decision” at the time. If it stuck, that ruling surely would’ve meant the end of free streaming music online.

Westergren is overjoyed, and the only catch is that Pandora users who go over 40 hours of free listening in one month have to pay $0.99 (which Westergren likens to “less than a dollar in the tip jar”) for unlimited listening the rest of that month, and for $36 a year listeners can upgrade to Pandora One, an “elegant desktop application” that streams faster and features personalized skins and no advertising.

Pandora listeners appear pretty satisfied, as $0.99 a month seems extremely low for unlimited amazing and diverse music. Plus, Westergren says that only about 10% of Pandora users, their “heaviest listeners,” go over 40 hours a month.

25-year old Sara Lynn La Meyer, a sophomore Religion and Peace Studies major at Naropa, told me “I can’t say I’m surprised [Pandora is no longer 100% free], but I understand. I always love free things, and I love Pandora, though during the summer I haven’t been listening as much. One dollar is doable.”

That kind of agreeability is exactly what Westergren is counting on. “It’s a great time for the DIY entrepeneur,” he says. “I actually think there’s a big opportunity at the intersection of band managing, technology and promotions.”

And big money. Pandora (based in Oakland, CA) has many notable investors and just last week announced that they’re getting a $35 million investment from Greylock Partners, which also owns parts of Facebook and LinkedIn. When asked how Pandora generally made money before this month’s ruling and whether that will now change, Western simply said “Pandora is advertising supported. That was the case before this ruling, and [it] remains that way.”

I’ve been continually traversing Pandora while writing this article and have only experienced one advertisement on the site – occasionally 5-second audio ads do pop up — so Westergren’s statement is a little confusing, but the company is obviously making money and about to make a lot more. However, the CRB ruling of 2007 made Pandora unavailable to non-US IP addresses; thus, Pandora is currently enjoyed only in America, and Westergren says that this month’s CRB decision has “no direct impact” on his company’s ban outside the United States.

“Hopefully [the ruling] will help catalyze efforts to reform the international licensing situation,” Westergren told me.

Personally, I’m also hoping the new financial support from Pandora’s listeners (as well as the millions the site is receiving from investors) will encourage Westergren’s employees to work harder to positively tweak the popular service’s tendencies. It oddly just took my listening experience from Ween’s trippy “Back to Basom” directly to the virtually unconnected thumping rock of the White Stripes and Led Zeppelin. Pandora maddeningly couldn’t find suitable matches for Ween other than easy stereotypes like the Flaming Lips, Primus and a hell of a lot more Ween

In the case of Bright Eyes, one only needs to click “thumbs down” a few times on Pandora to never hear Conor Oberst’s often pretentious and quivering voice again, but when the site can’t find suitable or pleasurable matches for a listener’s taste, one is apt to turn to their iPod or another internet radio station. Thankfully, both for Pandora users and Westergren’s investors, the site almost never does a listener wrong for an extended period.

It’s a work in progress, but it looks like a viable new business model is finally starting to emerge in the music industry and Pandora’s mythical box will be providing listeners with accessible, affordable music for years to come.