Pandora's Risky Business

With 78 million users, streaming’s original music service remains an online radio giant — but increasingly threatened by subscription blue chips like Spotify and Apple Music. Now, amid layoffs and acquisition rumors, co-founder/CEO Tim Westergren is about to launch an ambitious bid for subscribers of its own: “The other products out there are unsatisfying”

- Robert Levine

AS THE LIGHTS OF THE STRIP glimmer below, Pandora co-founder/ CEO Tim Westergren stands before two dozen advertising executives in a 61st-floor suite in the Cosmopolitan of Las Vegas. It’s the first day of 2017’s Consumer Electronics Show (CES), and he’s pitching Pandora’s new direction. “In my opinion, the other music subscription products out there are unsatisfying,” he says, referring to the on-demand streaming services the new Pandora Premium will begin competing with later in 2017. “They give you millions of songs, a search box and ‘good f—ing luck.’ ”

Clad in his usual uniform — button-down shirt, dad jeans, hiking sneakers — the 51-year-old Westergren proposes that the solution lies in Pandora’s Music Genome Project, which enables the service to recommend songs based on 450 characteristics, plus the data Pandora has collected on listener preferences. Those assets will power Pandora Premium when it launches before the end of March, as they do the service’s free radio and ad-free $4.99-a-month Pandora Plustiers.

Pandora rules the U.S. online radio market with a staggering 78 million monthly users, 4.3 million of whom pay for Pandora Plus, and brought in $1.2 billion in revenue in 2015. But it’s only now about to enter the bruisingly competitive on-demand subscription market dominated by Spotify and lately disrupted by Apple Music and Amazon’s Prime Music. The talk of 2017’s CES? Amazon’s Alexa Voice Service, the software that enables voice control on compatible devices — just as it allows Prime Music listeners to ask out loud for songs and playlists. And not long after the conference, Apple announced it would begin producing its own movies and shows exclusively for Apple Music subscribers, specifically to open up an advantage over Spotify.