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Summary:

At the of 2009, Pandora had 43 million listeners. On April 1, 2010 that number had grown to 50 million. In less than three months, it has added 10 million new listeners. What’s behind Pandora’s growth? Hint, it is not the browser. Instead look elsewhere.

One of my long-standing beliefs is that when you add connectivity to any device, you open up a new world of opportunities. Whether it’s the dashboard in your car, your television screen or simply your gaming machine, Internet changes everything.

One company that seems to have taken that lesson to heart is Pandora, which after nearly ten years of struggle has hit its stride and is growing at a rapid clip. Today, the company announced it has 60 million users registered to be listeners of the personalized online radio service. Pandora was helped by the popularity of the iPhone, and since then it has become the-music-service-to-embed in various consumer electronics devices.

Thanks to more connected devices, Pandora is growing at a healthy pace. It ended 2009 with 43 million listeners. On April 1, 2010 that number had grown to 50 million. In less than three months, it has added 10 million new listeners. Pandora’s chief technology officer, Tom Conrad once told me that going beyond the web has opened new opportunities for the company — and the numbers seem to back up that statement. Conrad told us that currently the web accounts for 20 percent of total radio listening, which means Pandora needs to expand beyond just the browser if it wants to go after “80 percent of the opportunity.”

Pandora is clearly taking advantage of the growth of internet-connected devices. And what’s more interesting is that smart and forward-looking companies such as Netflix and Skype are thinking along these lines as well.

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  1. @Om,

    Not only do I agree with you that connectivity is the key, I’d also add full internet capabilities as a critical requirement. Cell phones added internet access via the wireless access protocol (WAP) a decade ago, however it wasn’t until handhelds (smartphones or otherwise) had full internet capabilities did we see Pandora and other IP based services take off. Pandora was a little early into the marketplace, but the iPhone ushered in the full Internet and made WAP irrelevant in industrialized nations.

    My $.02.

    Best.

    1. I am going to say that full internet capability — a browser — is exactly what is not necessary on lower end devices. But the back end services have to be there. Pandora could be an ala carte packaged service on low end devices.

      These services offer the revenue streams and experience focus that users of feature phones would desire. While I agree that the web is a critical component of communication, the nature of that experience is likely to be widget-like or service/cloud oriented in the future.

  2. As usual, you have it wired, Om.

    I hadn’t used Pandora in a long time – until I got my iPad [don't have a smartphone].

    I can see my use increasing an order of magnitude when iOS4 hits the iPad.

  3. A big part of Pandora’s success was viral acquisition of customers (good article – http://www.forentrepreneurs.com/lessons-learnt-viral-marketing/). Once the connectivity was in place it allowed Pandora to go viral. How did I hear about Pandora? A friend told me about it a few years back when all they had was the browser version. Now that Pandora is on millions of mobile phones, the viral effect has grown exponentially – just like the iPhone starts conversions – Pandora does the same.

  4. Guys

    Let’s all get real. Build it and they will come. They are here at Pandora, FB, and Twitter. But who is making money? None of them. Maybe FB is cash-flow positive, but if it could actually demonstrate that it made real money, it would be a public company already.

    Pandora is cool, partly because Pandora is free. How many people pay for the premier service? A small portion of the 60M.

    I welcome the day when intelligent internet business models are lauded in blogs around the web.

    Of course, if I am wrong about the revenue of these companies, please correct me. I would love to know that they are real businesses.

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