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Summary:

Now that Pandora, a next-generation online music streaming service, has turned its first quarterly profit, the Oakland, Calif.-based company is looking at life beyond the web. And by doing so, Pandora is moving to embody what’s being called the device-agnostic Internet.

Now that Pandora, a next-generation online music streaming service, has turned its first quarterly profit, the Oakland, Calif.-based company is looking at life beyond the web. And by doing so, Pandora is moving to embody what’s being called the device-agnostic Internet.

“We became profitable for the fourth quarter of 2009, and now we’re shooting for profits for the entire 2010 [period],” Pandora’s chief technology officer, Tom Conrad, told me. The 10-year-old company plans to reach that goal by embedding itself in all sorts of consumer electronics devices that feature an Internet connection. For now Pandora’s ambitions are restricted to within U.S. borders.

In 2009, Pandora’s U.S. audience of registered users reached 43 million and at present nearly 100 different consumer devices other than computers are streaming the service. In December 2009 alone, 3 million new listeners joined Pandora — of which 2.7 million of them activated the service on a device other than a computer, according to the company.

Pandora is a perfect showcase for the so-called device-agnostic Internet, itself the result of three major trends:

  1. The marriage of computing and connectivity that can now take place without the shackles of being tethered to a single location. It’s among the biggest disruptive forces of modern times, one that will redefine business models for decades to come.
  2. The pervasiveness of the mobile Internet.
  3. The availability of low-cost, always-on computers (aka smartphones) that allow sophisticated software to conduct complex tasks on the go.

Pandora got a big boost at the recently concluded CES trade show, where it showed off the fact that its music offering, which combines radio-styled listening to serendipitous recommendations, is now being embedded in everything from thin LED televisions to Blu-ray players to digital frames. I’m among those who bought a Blu-ray player and subsequently signed up for my Pandora account online. I also listen to Pandora on a Sonos system as well and also on my iPod touch and on my BlackBerry. In other words, I see the value of taking my Pandora everywhere.

As to all the consumer devices that are embedding the service, Conrad said that “the high-volume products are only just hitting the market,” among them devices made by LG, Samsung, Sony, Sanyo, Haier, Divx, Toshiba and Panasonic. But the biggest boost, he said, was going to come from the embedding of Pandora in automobiles. Conrad hinted  about such a move to autos back in early December.

Ford, Alpine and Pioneer are three companies that are going to be putting Pandora inside their cars and automobile music systems, respectively. The service will piggy-back on 3G wireless connections on the latest generation of cell phones. While Conrad was candid enough to admit that the automobile ecosystem was going to take a little bit of time, for the company, it’s clearly worth the wait. “Nearly 47 percent of radio listening is in the car,” he noted. (Related from GigaOM Pro, subscription req’d: The App Developer’s Guide to Working with Ford Sync and Forget Syncing, Let’s Put Music in the Cloud.)

As Conrad explained, currently the web accounts for 20 percent of total radio listening, which means that Pandora needs to expand beyond just the browser if it wants to go after “80 percent of the opportunity.” I find it amusing that only a couple of years ago, Pandora was fighting for its life, thanks to the draconian policies of the music industry. Now it is audaciously viewing itself as the future of radio. Terrestrial and satellite radio providers had better watch out. (Related: Pandora Raises $35 million.)

In the meantime, Pandora has benefited handsomely from the iPhone phenomenon. In just 18 months, mobile (and other connected devices) have risen to account for nearly 30 percent of Pandora’s usage. That’s helped the company offer premium services, which has in turn helped it generate revenues and lately, profits.

No wonder Conrad and the rest of the Pandora team are thinking about Pandora playing everywhere.

This article also appeared on BusinessWeek.com.

  1. I suppose you mean “everywhere in the US”… :-(

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  2. Judging from the ‘Pandora is restricted’ message I get when I visit their website I’m guessing ‘everywhere’ means ‘not everywhere’.

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  3. yepp everywhere in the US, incl cars :)

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  4. Om, Pandora is not available everywhere. Most of everywhere is not the United States. S.

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    1. It’s what really counts though.

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      1. No.

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  5. I don’t understand how any practical use of mobile Pandora is possible while the US providers of mobile internet charge unbelievable amounts of cash for tiny amounts of data. I’m probably missing something here – please educate me. Won’t we burn thru our monthly allotment of data halfway thru “Roadhouse Blues”?

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  6. @Jeff – of course you will, that’s the point. It’s a revenue-enhancer for the US telcos. Those of us outside the US, where sensible data plans are the norm, are blocked from the site. Given the worldwide sales of music/share of sales that occur in the US, that explanation is the only one I can think of that holds any water at all.

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  7. remind me again how they make money? I have Pandora on 3 separate CE devices, my phone and PCs but still have never given them a cent.

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  8. Thank you for that term!

    When people discuss web versus application, its relevancy is limited. The web is the underlying technologies not the browser! Access the stream with whatever tool you have or need. Make a tool to dig deeper.

    I use Pandora on my iPhone in a dock connected to speakers, and rarely in a browser. Caching please!

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  9. If someone could get the Pandora folks to create an XBMC plugin/script for their service, that’d be golden.

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    1. Michael – Boxee has Pandora, and Boxee is based on XBMC. I can’t imagine it would be too hard to backport it to XBMC.

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  10. Fantastic service that keeps getting better. Need to get that International support.

    http://foryouredification.wordpress.com/

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