Tim Westergren

Tim Westergren: Pandora's goal is to supplant broadcast

Wednesday, September 25, 2013 - 11:40am

Pandora founder and Chief Strategy Officer Tim Westergren was spotlighted in a hosted Q&A session at the Goldman Sachs “Communacopia” conference yesterday. (Transcript here; elaborate registration required.) In a wide-ranging discussion, Westergren elaborated on Pandora’s business priorities, the state of music rights management globally, the company’s ad sales efforts, competition from Apple, the Nielsen/Arbitron merger, and several other topics.

“Our goal is to supplant the existing broadcasts of formal radio, becoming much more pleasing to consumers,” Westergren remarked at the start. Throughout the interview he emphasized Pandora’s main differentiator being the quality of its music experience (“We build better playlists”), and a stay-the-course roadmap absent of reinvention.

Pandora is a two-tier Internet radio platform that offers free listening supported by advertising, and ad-free subscription membership. Westergren clearly articulated how the two programs, with their respective costs and revenues, are balanced. Business growth efforts are concentrated on the ad side, with the premium membership portion considered supplementary. Subscriptions account for 20 percent of revenue. “We’re not a premium business [...] the real name of the game for us is delivering on the ad-supported business [...] that’s really where the home run is.”

Accordingly, the free-listening cap applied during this past summer was not a ploy to drive subscriptions, Westergren said, although it did motivate some users to sign up. The cap’s purpose was to solve under-monetization of a portion of non-paying mobile listeners. When that loss was corrected (no specifics there from Westergren), the cap was removed.

When it comes to supplanting broadcast radio, distribution is paramount. The Pandora founder talked about capturing market share in cars and in homes (neatly corresponding to survey results released yesterday by Edison Research showing car and home as AM/FM strongholds), and a strategy of ubiquity. A significant portion of Pandora’s engineering force is dedicated to embedding the service in all kinds of devices, from dashboards to in-car CD players to refrigerators.

If device distribution is proceeding quickly, geographic expansion is stalled. According to Westergren, the problem is music rights negotiations. It’s no secret that Pandora is struggling with content costs. “Rights administration is just not a very healthy part of the music business [...] rights are granted country by country, territory by territory.” Pandora was able to open in Australia and New Zealand because of favorable royalty setups, but has been thwarted in other regions because of licensing obstacles. “As we think about deploying in new countries, right now we can’t even begin to do it.”

A few other points:

  • Pandora is embedded in over 1,000 devices.
  • The service’s recommendation engine, built on the Music Genome Project, is enhanced by over 36-billion up/down votes by users.
  • Westergren has been aggressively hiring local sales specialists, region by region according to market share.
  • There is no immediate, specific plan for recently-raised capital. Acquisitions are possible, but nothing on the horizon.
  • Pandora’s audio ad load will never approach that of broadcast radio. It is possible to achieve a “fantastic business” with fewer commercials.
  • Westergren likes the Nielsen/Arbitron merger for the usual “common currency” reasons.
  • The competitive impact of iTunes Radio will be “modest.” Pandora has faced many large competitors, and its share has grown.
  • Pandora is the third-largest generator of mobile revenue.

Westergren to share his "vision for the future of radio" in keynote at CES 2013

Monday, September 17, 2012 - 9:00am

Tim WestergrenPandora founder and chief strategy officer Tim Westergren will deliver a keynote address at the 2013 Consumer Electronics Show (CES). He'll speak at the CES Leaders in Technology Dinner, an "invitation-only event" honoring "the top technologists, entrepreneurs and policymakers instrumental in furthering technology innovation," explains the Consumer Electronics Association (CEA).

CES, which takes place during January in Las Vegas, is reportedly the world's largest consumer electronics tradeshow. More than 150,000 people attended the 2012 show. President/CEO of eBay John Donahoe keynoted last year's Leaders in Technology Dinner, while 2011's dinner included a "fireside chat" between author/ journalist Arianna Huffington and Netflix CEO Reed Hastings.

Said CEA president and CEO Gary Shapiro: "Tim Westergren is a trailblazer in Internet radio and developed a game-changing, innovative platform...We are excited to have Tim keynote the 2013 CES LIT Dinner and look forward to hearing his vision for the future of radio."

You can find the CEA's press release here.

In HuffPost guest column, Pandora's Westergren calls for "technology-neutral solution" to "absurd" royalty situation

Friday, August 3, 2012 - 1:10pm

Tim Westergren"It may surprise Americans to learn that the form of radio they listen to has profound implications for how much the artists who perform the music get paid," writes Pandora founder Tim Westergren in a new editorial for the Huffington Post. He goes on to point out the "absurd" difference in the rates webcasters, SiriusXM and AM/FM broadcasters pay to performers.

The answer, argues Westergren, is "a technology-neutral solution that assures fair compensation to artists while encouraging new voices and new technologies. Legislation that establishes a fair royalty rate setting standard for Internet radio will drive investment in webcasting, which ultimately means greater revenue and greater opportunity for working artists." 

You can find Westergren's full article in the Huffington Post here.

All sides of radio royalty debate to testify in House subcommittee hearing tomorrow

Tuesday, June 5, 2012 - 11:35am

CongressThe U.S. House of Representatives Subcommittee on Communications and Technology will hold a hearing tomorrow on "The Future of Audio." Witnesses to testify include Pandora founder and Chief Strategy Officer Tim Westergren, along with representatives from the Consumer Electronics Association (CEA), CTIA, RIAA, NAB and others.

The hearing will take place tomorrow at 10:15AM Eastern.

Westergren's testimony will focus on the "severe and fundamental problem" facing Internet radio. "We are subject to an astonishingly disproportionate royalty burden compared to these other formats [AM/FM radio and satellite radio]," his written statement says. "The inequity arises from the fact that Congress has made decisions about radio and copyright law in a piecemeal and isolated manner... It is time for Congress to level the playing field and to approach radio royalties in a technology neutral manner."

Gary Shapiro, President and CEO of the CEA, will offer a similar argument: "No one source should be given preferential treatment over all others. For this reason alone, we do not agree that Congress should take any action favoring broadcast radio over any other source of audio."

Cary Sherman, Chairman and CEO of the RIAA, will also argue that broadcasters pay a performance royalty.

Arguing against platform parity will be Steven W. Newberry, President/CEO of the Commonwelath Broadcasting Corp., speaking on behalf of the NAB. He will argue broadcast radio should continue to be exempt from paying performance royalties because of its impact on local communities and other government regulations it must adhere to, but from which webcasters are exempt.

Jeff Smulyan, Chairman, President, and CEO of Emmis Communications will testify in favor of regulation that puts FM chips in cellphones. CTIA VP Christopher Guttman-McCabe will argue that instead of regulation, FM chips in cellphones "should be driven by consumer preference." He will also request a "light touch" from Congress when it comes to other matters, like spectrum.

Other witnesses to testify include Ben Allison, the Governor of the New York Chapter of the National Academy of Recording Arts and Sciences and David M. Israelite, President/CEO of the National Music Publishers' Association.

You can find more information about the hearing here.

Pandora hosts 200 ad buyers at launch party for Chicago sales office

Thursday, May 24, 2012 - 11:10am

Tim Westergren speaking at Pandora's event in Chicago

Pandora on Monday hosted around 200 ad buyers for a party to celebrate the launch of its new Chicago sales office.

The "just launched local sales effort" by Pandora in the Windy City includes a staff of 25 and is headed by Gabe Tartaglia, previously GSM for CBS Radio's WUSN and WCFS in Chicago. Pandora's Director of Mobile and Emerging Media, Kim Luegers, previously with DraftFCB, OMD, and Mediaedge, is also based in the Chicago office, located in the Tribune Tower.

The launch party took place at theWit Hotel's ROOF and featured an appearance by Pandora founder Tim Westergren. "We have a million monthly listeners just in Chicago," Westergren told the crowd, "which makes us one of the biggest radio stations in this city. And we're growing like a weed. We hope to soon be the largest."

He explained that Pandora is undergoing a transition to "not just be big on a national level, but getting to a level where we're big locally… [we have to] think about ourselves like a local radio station. We are like a lot of big local radio stations all put together, all across the country... We're becoming radio. Radio writ large."

Westergren praised traditional radio for still being "the pipeline to music for Americans." But "there will come a time when people think about 'radio,' and it will really be 'personalized radio'

"We're going to revolutionize radio... reinvent it."

Westergren: "No indication" UK copyright society will offer rates allowing Pandora re-entry

Tuesday, March 27, 2012 - 11:25am

Tim Westergren, founder of PandoraWith the UK's streaming royalty rates set to expire in June, Pandora founder Tim Westergren tells paidContent: "We’ve seen no indication from PRS [For Music (the UK copyright collection society)] that it is prepared to offer economically viable rates for services like Pandora."

He continues, "The current rate demanded by PRS of 0.065 pence per listener per track equates to 47% of the revenue Pandora achieved on a per listener per track basis in the year we just completed, during which we generated $274 million in revenue and were the clear leader in monetizing internet radio."

Pandora closed its service to UK users in 2008. Westergren said then: "Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded per track performance minima rates which are far too high to allow ad supported radio to operate" (RAIN coverage here).

Currently Pandora is only available to U.S. users.

Westergren argues that Pandora's absence from the UK market hurts artists and consumers. He cites recent Rajar figures that time spent listening to web radio in the UK was 35 million in Q4. "By contrast, Pandora alone streamed 975 million hours in the U.S. in just the most recent month," or roughly 32.5 million hours per day.

paidContentThe current UK streaming rates expire in June and will be reviewed after "informal discussions" between web services and PRS For Music, paidContent reports.

"But, unlike in 2009, when Last.fm and others joined the throngs of services demanding cheaper rates from the royalty agency, so far Westergren’s sounds like the only voice speaking up so loud for a further downward revision," writes paidContent.

You can find paidContent's coverage here.

Syndicate content