Opening the Music Box
With Founder Tim Westergren’s Music Genome Project, online streaming radio gets personal.
JONATHAN SPRAGUE
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E-mailAfter nearly a dozen years working through royalty-fee negotiations, forging partnerships with hardware companies and perfecting its technology, Pandora Media Inc. (NYSE: P) has become a household name synonymous with personalized radio. “We’ve hit many rough spots,” says Founder and Chief Strategy Officer Tim Westergren, 45, who maxed out credit cards and fought off skeptics along the way. “But we had an unshakable belief that we could make it work. Pandora is transforming the last medium yet to be disrupted by the Internet.”
Today, Oakland, Calif.-based Pandora delivers personalized streaming Internet radio stations to virtually any Internet-connected device, including desktop computers, set-top boxes, game consoles, Blu-ray players, televisions, smartphones and a fast growing number of cars. Listeners personalize their own radio stations based on their favorite artists from Lady Day to the Barenaked Ladies or on music genres from classical to classic rock. Pandora’s proprietary technology selects similar artists and music based on the listener’s likes and dislikes. Listeners can opt for free music supported by advertisements or pay $36 a year for ad-free stations with a higher-quality audio stream.
VIEW THE HISTORY OF PANDORA MEDIA
The Path to Personalized Sound
And its popularity is growing by leaps and bounds, says the company: Pandora is the second most downloaded free app on the iPhone and one of the top 10 downloads for the iPad. Pandora recently announced a partnership with DMX, a commercial music provider, allowing the subscription base to expand to shopping malls, doctors’ offices and other businesses.
“More than 40 million people tune in to Pandora every month,” says Joe Kennedy, president and CEO. “That’s a 65 percent increase over last year.” The service reported more than 100 million registered users who listened to a total of 2.1 billion hours of music for fiscal 2012’s third quarter, up 104 percent over the same period last year. While paid subscribers accounted for about $9 million of the company’s last quarterly revenues of $75 million, most sales ($66 million) came from advertising, up about 102 percent over the same period last year. (Pandora also makes a small fraction from track or digital sales that are referred to sites like iTunes and Amazon through Pandora’s “Buy” button.)
The Music Genome Project
Before Pandora, Westergren, a native of the small Minnesota town Excelsior, played piano with several groups, including YellowWood Junction, an acoustic rock band. (“We were rock stars in our own minds,” says the jeans-and-T-shirt-clad Westergren.) A graduate of Stanford University, where he studied computer acoustics and recording technology, Westergren also composed and produced music for films. During this period, he hit on the idea of analyzing music that filmmakers had used in previous movies to help predict what music those directors would favor in future projects. That germ of an idea became the Music Genome Project.
The Music Genome starts with trained music analysts who categorize songs based on up to 450 musical attributes, including tempo, harmony, melody and lyrical content. They plug that information into a database, essentially recording every piece of the music’s DNA. A computer program then analyzes the data and does something no other software can do, says Kennedy: associate different pieces of music based solely on their musical characteristics. The process is labor intensive, he notes, but it gives fans a unique and unbiased way to discover new music based on their existing tastes.
Initially, Westergren saw the Music Genome Project not as a tool for consumers but as a program for businesses, such as record stores trying to sell new music based on their customers’ existing preferences. Pitching this idea, Westergren had raised a reported $1.5 million from angel investors by 2000. Then the tech bubble burst.
