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September 18, 2007
It's an idea Pandora founder Tim Westergren thinks about a lot.
Between 100 town hall meetings and several sessions for seniors at this year's AARP conference, Westergen has been campaigning for more Internet radio listeners for both Pandora and musicians in general.
Pandora uses the Music Genome Project, a tool that compares musical genetic codes of songs, to create personalized radio stations. You tell it what you like; Pandora plays those artists and others that have songs with similar musical qualities. With music from both big record labels and independent artists, listeners get more selection and increased knowledge about music.
Despite a much-publicized standoff with organizations like the Recording Industry Association of America over royalty rates, Westergren (also Pandora's chief strategy officer) says Internet radio will actually bridge the gap between the pop superstar and the working-poor musician. He says it may even create a new consultant and services business model for record labels.
The new champion of Internet radio sat down with CNET News.com to give the latest scoop behind the royalty rate negotiations and the music industry's crumbling three-legged stool.
Q: You had an unusual launch with Pandora. Explain that.
Westergren: We started off by just making it available to friends and families to just give it a trial run. Not long after, these "friends and family" wound up spiraling to around 5,000 or so within a few weeks. That was a first sign that we had something people were interested in.
We wound up launching it in October, but as a paid service for three bucks a month...We were able to get people to sign for 10 hours of the intro Pandora for free, but few people were actually registering.
People would use 10 hours for free and then delete the cookies?
Westergren: Exactly. After 10 hours they would log off, delete the cookies and then log back on and refresh their profiles so we don't recognize them. We made a dent and people were using it a lot, but they didn't want to pay for it...So we went free in November '05...I think we had 250,000 people come to Pandora.
In one week?
Westergren: In one day. The day after we launched I think probably we had that many. In the first week we were adding I think 50,000 or 60,000 new listeners a day. That lasted for a few weeks and then it went down a little bit and then a steady rise ever since.
You used to compose music for movies. Explain how that process has trickled into Pandora.
Westergren: When you're a composer your job is to figure out someone else's musical taste, to pick up the director's musical taste. I call it a musical Meyers-Briggs test...You kind of home in on what they like and you're trying to translate their feedback into musicological information you can use to create a new composition. So the genome was really born of that process.
Originally you were called Savage Beast and sold the Music Genome Project engine as a service?
Westergren: We would license access to our tool, so people could use it to make recommendations on their respective Web sites. You know, 'If you like this song, you will like this.' Then we very, very briefly thought about being an online musical retail site, but we never raised enough money to make that mistake.
Is it true you made 348 pitches before you got $1.5 million in initial funding?
Westergren: Yes, in March of 2000. Then in March 2004 we got $8 million...$12 million in '05...and we did another round the following year, but haven't disclosed that figure yet.
But you're still not making money from Pandora?
Westergren: We're losing an armful of money every month right now. But that's not a surprise to us.
You're probably the only executive I know of who travels cross-country holding town meetings about your product. Explain how this practice got started.
Westergren: My original plan was to just go looking for music. I was going to get into a van and really just drive a lot.
Literally a van?
Westergren: Yeah. I actually had a van. I was going to get a trunk in the back and fill it with CDs as I went. Just literally collect them and then actually mail them back to Pandora. That's how I started...That was 2006, I think it was March, for South by Southwest, the music conference in Austin, Texas.
How did that go?
Westergren: I spent about two weeks on the road in my first stint. I originally thought I was going to go longer, but...I'd have these long days of meetings and then get back to my hotel room and have like 400 e-mails so...I go now in four-day stints generally.
The first one just two people came, but I just kept doing them and they grew. I wanted some kind of a forum where people could actually talk, if they'd come to talk to me, and so we developed this town meeting format.
Music is something that really is such a sort of personal and important thing that people are willing to do something, you know? They want to come, they have something to say about it and they are welcoming the opportunity to tell the company founder what they really think.
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