Pandora Co-Founder Says, ‘We Should Have Done What Spotify Did’
Tim Westergren, who co-founded Pandora (as Savage Beast Technologies) back in 1999, recently stated that his company “should have done what Spotify did” in terms of promptly closing licensing agreements with the major labels, regardless of the near-term implications, in pursuit of a broader expansion down the line.
The Pandora co-founder and former CEO made this and other interesting remarks when speaking with Vice as part of a long-form piece, exploring in detail the platform’s early history as a provider of recommendation technology, internet-radio entry, multiple capital-related trials, and ultimate growth into an on-demand streaming service and SiriusXM subsidiary.
Towards its start, the lengthy text charts the role that Pandora played for consumers after pivoting into radio in 2005, including by recommending music to these individuals based upon their listening habits. Factoring for the statutory performance fee at the time of this launch some 16 years ago, Pandora paid just $0.000762 per play, or a little over 76 cents for every 1,000 plays.
The arrangement enabled Pandora to forego closing deals with the major record labels (then the Big Four, prior to EMI’s 2012 sale), but the Copyright Royalty Board’s 2007 approval of a more expensive royalty schedule exacerbated Pandora’s existing funding woes. And despite surviving these challenges, Pandora eventually found itself without a means of competing with the quick-growing music-streaming space.
“There’s many pieces to this puzzle of why I decided to leave,” former Pandora CEO and current Rippleworks exec Joe Kennedy said of his departure from the former. “Among them was the natural strain of having worked with the board for a long time, the strain of being a public company, and this very significant pebble in our shoe of what to do about Spotify and the on-demand business.”
Moreover, Tim Westergren didn’t mince words when describing his thoughts on the timetable associated with Pandora’s entry into streaming proper. “I think that we still squandered an enormous opportunity having survived all [those settlement negotiations] by not pivoting to on-demand fast enough,” said Westergren. “I feel incredibly proud and sort of marvel at what we got through, but I also have a lot of frustration about how we let it slip away after we established such a lead.
“We should have done what Spotify did and ate a pound of flesh to get the industry on our side, then expanded the scope of the product and then really gone global and become an all-you-can-eat service,” finished the Pandora co-founder, who also co-founded a livestream platform, Sessions.
Spotify has quietly broadened its reach in recent years, including by investing many millions of dollars in podcasting, exploring other forms of non-music audio entertainment, and even touting its role as a promotional tool.
Building upon the latter, Spotify and Universal Music inked a massive, multiyear licensing deal last July, and the contract encompasses “collaboration on new, state-of-the-art marketing campaigns.” Four of 2020’s five most-streamed Spotify artists are signed to UMG.