In our house, everyone loves Pandora, the online music service that allows you to create your own station that perfectly fits your tastes. My daughter and I have created a station that everyone in the family enjoys. It blends singer-songwriters, angsty modern rockers and a healthy dose of Disney stars (think Hannah Montanah meets Jack Johnson).
For years, Pandora has been free, and I've wondered how they could ever generate enough revenue to stay in business, since the ads are minimal and Pandora One, the subscription model they've introduced seems targeted to a very small subset of the listening community.
However, I recently received a letter from CEO Tim Westergen stating that as a result of their recent agreement with the Copyright Royalty Board, I would now have to pay to receive more than 40 hours/month of music. I can either pay $.99 per month that i go over 40 hours, or I can sign up for Pandora One and get all kinds of services. Now, I'm not sure I'm going to take them up on their offer, but it was a good opportunity for Tim and Pandora to set the stage for upcoming fees.
Pandora recently raised a major round of financing (led by Greylock, and rumored to be around $35M), and I know that their investors expect Pandora to start converting their loyal listeners into meaningful recurrning revenue. Maybe Pandora's difficult negotiation with the Royalty folks is actually paving hte way for new revenue models.
We'll have to wait and see. In the meantime, I'll be listening (at least for 40 hours a month!)
