For Its Next Tune, Pandora Will Change The Music Industry

Ever since CD sales collapsed, many musicians have had a terrible time making a career in music. With yet-to-be-named audience engagement capabilities, Tim Westergren says Pandora’s soon going to change that.

For Its Next Tune, Pandora Will Change The Music Industry
[Image: Flickr user kennymatic]

Before founding Pandora and becoming a multimillionaire, Tim Westergren used to play piano for YellowWood Junction, a Bay Area band with a sound between Fleetwood Mac and Ben Folds Five. As indie musicians must, they’d traverse America for gigs–with no one to help them get butts in seats.


“We used to get in a van and drive 13,000 miles to Boulder and put flyers up on telephone poles to get people to come hear us play,” he says. “There was no infrastructure for promotion for bands, unless you were on radio–and that was a very narrow pipe.”

From what Westergren says, Pandora soon may become that infrastructure for its 100,000 artists. It’s the next step for a company that’s been driving streaming radio since its founding in 2000. The company spent many lean years before it took off, and by 2011 they named one of our Most Innovative Companies. That same year, Pandora filed an IPO–as of now, stocks sit at 36.03 a share. Their latest move is targeted in-car advertising. From what Westergren says, the next step will be giving artists a similar power of focus.

While he’s cagey on details, Pandora’s “building a set of capabilities” that will allow artists to “harness” their audiences, with the first fruits coming this summer. It’s the ingredients for a very different music industry, he says, for once artists can look get detailed data of their fans, they’ll better be able to drive patronage of their art.

It sounds a lot like Google Analytics or Chartbeat: in the same way that web publishers track metrics to better understand their readers, musicians could tune to the taste of their listeners. As Westergren explains:

You have an audience of people who thumbed up your music, thumbed it down, created stations with it. There are people that express a preference for your music, we know who they are. The idea is to allow you to go in and see those people, understand that data, understand the songs are being thumbed up, thumbed down, what songs are doing well, what stations they do well on, understand your own data and do it in a very detailed way.

On top of that, Pandora plans to provide a map of fans across the country. This will let artists see where their fans are and let them know when they’re coming to town. This will eclipse the promotions pipe of broadcast radio, Westergren says: while a couple hundred songs get rotated through on the radio, Pandora plays 95,000 a month.

“What Pandora has, which has never existed before, is a platform this big that can accommodate so many different artists and has personalized knowledge of every listener and the ability to communicate with them,” he says. “Those have never been brought together under one platform–and it’s really the ingredients for a very different industry.”


But as the industry is today, Pandora has drawn the ire of artists. Recording artist Blake Morgan a correspondence with Westergen on the Huffington Post after he made only $1.62 after his songs were played 27,900 times on the Internet radio service. Spin reported on how one artist got $16.89 after million plays. And The Los Angeles Times asked if Westergren was an enemy or ally to bands after he lobbied Congress to lower royalties for digital music, “a move that made him appear a soulless businessman all too eager to bite the hand that feeds him.”

From what Westergren says, the music industry has had a “kind-of maniacal” focus on the royalty rate and what it should and shouldn’t be. It’s come at a time when the industry’s still trying to right itself as the collapse of CD sales. To Westergren, a reframing is necessary for a recovery.

“Moving from an argument about the right number, moving into a discussion about products and capabilities and the value of the platform,” he says, “(that) will change the dialogue, I believe.”

Ironically enough, Pandora’s been planning on building these audience-engagement capabilities for a while now, but they haven’t had the resources due to royalty fees, which eat into half of Pandora’s revenues. But once artists are empowered to engage with their audiences, making a living as musician sounds a lot more sustainable.

Which would have been great for YellowWood Junction.

“How great would it be back then if I had known that I could send a message to 3,227 people in Boulder that created a station with my band that I was coming,” he says. “That’s the kind of stuff we’re talking about.”


About the author

Drake Baer was a contributing writer at Fast Company, where he covered work culture. He's the co-author of Everything Connects, a book about how intrapersonal, interpersonal, and organizational psychology shape innovation.