Suppose I put in the name of an album you would know, Kind of Blue from Miles Davis. You would type me a certain way. And suppose my next album was Nebraska from Bruce Springsteen.
So you're creating a second station. On Pandora, you can create up to a hundred different channels or stations.
"Station" in this case means...?
It's a sequence of songs. Radio is not quite the right word. But it's a stream of music based on this input that you started with.
So you began to get advertisers, and you began to get subscribers.
Right. We launched it briefly as a subscription-only service but fairly quickly migrated to a free offering and a subscription offering.
If it's free, why would I want a subscription?
To get rid of ads. Most listeners are free users; a small percentage subscribe.
Do you believe the advertising model is going to prevail on the Web, or will people begin to create some kind of pay walls? You know, this is the burning question for everybody.
Advertising-supported free is certainly going to be the dominant paradigm for the Web. I think there are a small number of companies that have the brand and content to command subscription. You can count them on a couple hands, though.
What distinguishes them?
It's high-quality, original content. You know, cable is an example of that. And I think in the news world, some publications have such consistent high-quality information that they can command a subscription.
And people who advertise on Pandora are looking to reach what kind of audience?
If you're a car or a beverage company, you can come to Pandora and say I'd like to put this advertisement in front of men in their 30s listening to rock music in Kansas. And Pandora would be able to target your advertising. That's really the long-term promise of this kind of a platform.
What has the iPhone and related devices done for Pandora?
It's impossible to overstate. The iPhone has...almost doubled our growth rate overnight. More important, perhaps, it changed the way consumers perceived Pandora. Most people came to Pandora on a laptop, principally at work. When the iPhone came out, suddenly you could take Pandora with you. You could go to the gym and be on the treadmill. Or you could buy a $2 adapter and plug it into your car.
And you didn't have to download songs from anywhere else.
Yeah. Streamed music, and you could curate it in real time. [Apple has] redefined our entire industry.
What has the iPad done?
The iPad's a whole new really interesting option for us because it gives you the opportunity to put information adjacent to Pandora so you can be listening and reading as you would with an album cover when you were younger.
Might you provide other kinds of information? Like, could you stream news if you wanted to—so I could listen to music and read news at the same time?
Or you're listening to a band, and you could learn that band is playing a concert nearby.
Where are you going to be in 2020?
I would like Pandora to be a global company. Currently, we're only available in the U.S., which is profoundly frustrating. We're trying to crack that nut...and I hope we have a billion listeners around the world and...[change] the radio experience for people.
I didn't know people left music.
As people get older—by that, I mean into their 20s—get a job, have a family, time gets a little bit tight, and they really lose their connection to music. Your CD collection gets stale; music becomes wallpaper. They don't lose their love of it, but it's harder to stay fresh and engaged. One of the reasons Pandora's growing so fast is that people are rediscovering a passion—they're learning about new bands. We play the music of 90,000 artists. We have three-quarters of a million songs.
Are you planing to go public?
You know, going public is a fund-raising tactic. If it made sense, we'd sort of think about it, but there's no specific plan there at all. I will say that I think we have the potential to build an enduring standalone company, and that's our principal focus.
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