Pandora Files To Go Public(techcrunch.com)
techcrunch.com
Pandora Files To Go Public
http://techcrunch.com/2011/02/11/pandora-files-to-go-public/
12 comments
They actually train their people in music theory, because they pull the music apart and list a few hundred features. Depending on the genre, there are different lists of musical features that might differentiate the songs.
This is what makes Pandora unique from Last.fm, or Ping, or other "social" music discovery sites. Instead of recommending songs according who likes them, it learns what kind of music you like. It looks across genres and artists to the actual musical features of each song.
This is what makes Pandora unique from Last.fm, or Ping, or other "social" music discovery sites. Instead of recommending songs according who likes them, it learns what kind of music you like. It looks across genres and artists to the actual musical features of each song.
I don't know whether this has changed, but years ago when I worked there, the music analyst jobs required that you already know some music theory. (The training is to learn their system.) It's a good day job for musicians.
OK, that is good to know. I had talked to somebody about this problem several years ago and I had thought that you could start with some kind of metric space and see which songs were 'close' to each other. The guy I was talking to seemed to view the problem as a kind of Bayes Theorem problem. The example being that if you had some obscure Beatles album then you most likely had 'Abbey Road' but the inverse probably wasn't true and that is where a software service could step in ... to recommend the obscure album as one you would probably like.
One thing that I really like about the service is finding artists that seem to lead to lots of other great songs. It isn't always who I think it is. For example on a lark I put in "New Radicals" because I liked one of their songs and I was so impressed with how well that defined a particular sound. When I put in big names like the Beatles or Rolling Stones I don't think I left those stations defined for very long. I wonder is there is some kind of structure to the what Pandora has calculated that could show which bands or songs seem to be most influential.
One thing that I really like about the service is finding artists that seem to lead to lots of other great songs. It isn't always who I think it is. For example on a lark I put in "New Radicals" because I liked one of their songs and I was so impressed with how well that defined a particular sound. When I put in big names like the Beatles or Rolling Stones I don't think I left those stations defined for very long. I wonder is there is some kind of structure to the what Pandora has calculated that could show which bands or songs seem to be most influential.
I agree that it has a nice station feature, but I've almost completely switched to mog. For about the same price I can listen to whatever I want whenever I want and as many times in a row as I want. Their radio feature is decent as well and for only a few more bucks a month it seems a much better value. Of course pandora has a huge advertising factor that could bring in good revenue for them to make it worth the investment.
I stay with Pandora precisely because I can't listen to whatever I want, whenever I want, as many times in a row as I want. That's a whole lot of deciding and deciding takes time and effort. Pandora knows the music I like and is amazing at finding new music that I will like, without any time or effort on my part. All I have to do is turn it on. I have farmed out my music selection responsibility to them and I couldn't be happier about it.
P.S. My friends are always complementing me on how awesome my music is. I try not to take too much credit for it.
P.S. My friends are always complementing me on how awesome my music is. I try not to take too much credit for it.
I find it sad that you have 10 points when I have 1 point, as if your statement about Pandora proves that Mog can't match up and you have never wanted to have a bit more control over your music (and that what I've said has no value). I'm not a mog salesperson. I'm a music fanatic that used to listen to pandora like crazy until I realized I could have more control and still have a great radio feature with Mog.
I want to see the future of radio be one of full choice with great suggestions, not pandora's restrictions. I think Pandora has built amazing suggestions, but it's not perfect and I want to push for the next generation of music experience.
I want to see the future of radio be one of full choice with great suggestions, not pandora's restrictions. I think Pandora has built amazing suggestions, but it's not perfect and I want to push for the next generation of music experience.
I also checked out mog after reading your post, and it seems like a great service. My post was not meant as a critique of mog; the main point was that before Pandora, 'managing' my music was a time-consuming and tedious process. Discovering new music involved hours of browsing amazon listening to 30 second clips and trying to make educated bets as to whether I would actually like a CD or not. Making music playlists is another very fidgety exercise, especially when trying to update them with new music. Pandora solved all that for me, and for free! If I decide the ads on Pandora get to be too much, I might consider trying out mog, but for now I have very little motivation to switch.
That's fair. I think a large part of why you're not getting more upvotes is that Pandora seems to be far more popular than MOG. I hadn't heard of MOG until you mentioned it. I went to their site, and (assuming their suggestion engine and library is about as good as Pandora's or better) it seems to be all of the things I wish Pandora would be.
FWIW, you've caused one rabid Pandora fan to give it a look.
FWIW, you've caused one rabid Pandora fan to give it a look.
This company is almost entirely investor owned. Geez.
It's been saved from the brink of death so many times, the actual employees and founders really aren't going to get a tremendous windfall for their efforts.
It's been saved from the brink of death so many times, the actual employees and founders really aren't going to get a tremendous windfall for their efforts.
At least they will get something which is better than if they didn't let investors save it. A quick look seemed to reveal they had pretty high salaries though so it's not all bad.
I can't get Pandora in Canada (unless I use a proxy), so I don't really know how it works. I was struck when I read:
"About 86 percent of Pandora’s revenues ($78 million) comes from advertising, the rest ($12 million) comes from subscriptions."
which made me think, wow, Pandora is kind of like a newspaper, magazine, or cable TV network!
"About 86 percent of Pandora’s revenues ($78 million) comes from advertising, the rest ($12 million) comes from subscriptions."
which made me think, wow, Pandora is kind of like a newspaper, magazine, or cable TV network!
Pandora commands higher than average ad rates. Remnant (which is bargin basement inventory) is somewhere around $5cpm and I don't think they sell to networks for display to keep demand high. It's actually hard to get inventory there unless you are a premium buyer. For those of you who don't know or care much about online ads, all this basically means is that almost every other publisher (Huffpost, whatever) would kill to Pandora's rates. The fact that they aren't incredibly profitable shows how tough the business is. God knows how Grooveshark makes any money.
Yeah, can't get it here in Europe too. Thus I've thrown something together to get it running over TOR. Luckily only the control interface checks if your IP is from the US. The traffic heavy so streaming doesn't have to go over TOR.
https://github.com/jsz/PanTORa
https://github.com/jsz/PanTORa
I don't know much about the market/strategy behind IPOs. Is it a good idea to IPO if you just lost ~$325k?
I assume they have intelligent reasons behind the IPO - can someone explain the rationale?
I assume they have intelligent reasons behind the IPO - can someone explain the rationale?
The article states they lost $328k on revenues of $90M for the first 9 months of the year. The $328k loss is not really material (either as a proportion of revenue, or absolutely versus the size of the business) they are essentially breaking even. If you look at the numbers (image in the article) The $328k loss also includes some exceptional charges, they made an operating profit of $1.15M in the period.
Their revenues in the same 9 months of last year were $31m, so they have tripled their revenues year on year. Over the same period their costs less than doubled.
If one were to extrapolate this growth rate forward by just one year (a bit crude, but makes a point), they'd end up with $270m revenue, on $170m costs so $100m profit.
They are now breaking even - which is a simple metric of a sane business/proven model, doing significant revenue and growing very quickly. So now they are in an attractive state for the markets.
In terms of strategy, Techcrunch shows their first VC round was back in 2000, with significant further rounds in 2004 and 2005. One could safely assuming the overriding factor is that VCs will be looking for an exit.
An IPO will also provide the company with significant injection of operating cash, along with liquid paper (stock) with which they can use in further acquisitions
Their revenues in the same 9 months of last year were $31m, so they have tripled their revenues year on year. Over the same period their costs less than doubled.
If one were to extrapolate this growth rate forward by just one year (a bit crude, but makes a point), they'd end up with $270m revenue, on $170m costs so $100m profit.
They are now breaking even - which is a simple metric of a sane business/proven model, doing significant revenue and growing very quickly. So now they are in an attractive state for the markets.
In terms of strategy, Techcrunch shows their first VC round was back in 2000, with significant further rounds in 2004 and 2005. One could safely assuming the overriding factor is that VCs will be looking for an exit.
An IPO will also provide the company with significant injection of operating cash, along with liquid paper (stock) with which they can use in further acquisitions
care to take a guess on the opening day market cap? i'm thinking 400-500M.
Still seems weird seeing a company that's not even profitable yet go public. I don't expect the initial demand for their stock will be that high, despite the growth.
Plenty of companies go public before becoming profitable, it's a way to raise capital. Tesla Motors comes to mind for a recent example. Same for Clear.
Exactly. The entire purpose of opening your company up to the public is so that you can raise more money than you would otherwise get privately. Yes, the shares would probably be discounted for lack of profitability, but perhaps the timing is right for them. I don't know.
It's not just about profitability, valuation takes future cash flow into account. So, if the market thinks that Pandora's cash flow would increase without much risk, and they do have healthy revenue, they can have a successful IPO.
Think about Tesla, which is much more in red but had a great IPO.
Think about Tesla, which is much more in red but had a great IPO.
Oh, I read "files" as a noun there, as in they were going to let people see inside their database of music-quantification. Was very disappointed on learning what it actually meant...
You know something's screwed up when you can buy a company's stock, but not their product. Canadian music and copyright laws are terrible.
I think Pandora will go back into heavy losses if they raise money. I love Pandora as a service, but it's a far cry from being a Netflix. ( a long time paying customer of both )
Pandora's revenue is threatened by so much, RIAA contracts, pirating, advertisings race to zero ( via google ), etc...
They know this, and they will need to reinvent themselves to be worth anything. As a result I predict they will blow the 100 million on radically new business methods. Considering the success rate of music companies... I am worried.
Pandora's revenue is threatened by so much, RIAA contracts, pirating, advertisings race to zero ( via google ), etc...
They know this, and they will need to reinvent themselves to be worth anything. As a result I predict they will blow the 100 million on radically new business methods. Considering the success rate of music companies... I am worried.
I hope they spend it on advertising. Their product rocks, i think they just need wider exposure. They also claim exclusive providence to being able to authentically post jobs in the bay area looking for "rock stars" to help out their company ;)
That would be a pretty bad sign. I sure as hell wouldn't invest in a company that's going to turn around and spend the money they raise on ads. They should be building a war chest and their biz dev and legal teams to get some leverage on the labels. Regular radio pays $0 of their revenue to labels, Pandora pays $.50 of every $1.
Radio stations pay annual fees for the license of broadcasting music, which is why stations have to report every song they play (this data is sampled to divvy up royalty payments to labels and artists.)
It allows their investors to sell stock and get their money out.
I wonder if they pay lower royalties on live music and that's why they try to jam it into my playlists all the time. In the last year or so I've felt there like there was something just a little off about it some of the song choices and I'd be curious to know if different artists/labels/genres command different rates and if that impacts the song choice.
The number one reason I love Pandora is that it offers an ad free paid version with higher quality. Its dead simple and does exactly what you want it to without tacked on social networking.
If you're not from the US and want to use pandora, I've got some scripts bundled together to get it running over TOR (it's not as slow as it sounds because only the control interface is using TOR and the stream goes through your 'normal' internet connection):
https://github.com/jsz/PanTORa
https://github.com/jsz/PanTORa
And the IPO frenzy starts heating up... like it's '97
Not really.
Go find a company from '97 that had $70 million in revenue and was breaking even.*
If there is a company, it might have had absurdly inflated ad-based revenue when CPMs were like $30.
Go find a company from '97 that had $70 million in revenue and was breaking even.*
If there is a company, it might have had absurdly inflated ad-based revenue when CPMs were like $30.
ok, maybe more like 95... Netscape had $80mil in revenues and was close to break even (made a profit in '96)
http://www.secinfo.com/dRqWm.8Ae8.htm#49o5
Netscape absolutely deserved to go public based on any metric. The future could not be predicted based on their inaction and Microsoft's dominance.
It is my understanding that they have hired musicians to listen to each of the songs they stream then rate each one according to dozens of factors. The factors include things like "acoustic guitar", "strong melody", "high studio production values", "gritty vocals", etc etc. Then they are able to do some kind of cluster analysis on that dataset. So that if you put in "Stone Roses" you hear music from that band but then others that have a similar sound.
I find about 2 or 3 new bands that I really like every week. I have actually started buying CDs again.