At lunch one afternoon, Kennedy scribbled P-a-n-d-o-r-a on the back of a Billboard magazine. All the wives and partners of top company officers had the same reaction: “But bad things came out of the box!”
Then there was the matter of the cybersquatter who owned the URL; Pandora bought it cheap. And the defunct Idaho cover band that owned the trademark, Pandora’s Box; they hired a private investigator to find the former members and made a $5,000 deal for the name.
Easier to spell than Pythagoras.
Slowing the growth
Pandora grew fast — faster than its ability to monetize the service. But, less than two years after launching, it was about to run headlong into a threat that could have killed it.
In 2007, a federal panel — the Copyright Royalty Board — issued a ruling that would have raised the royalty rate paid by webcasters so high that it would have forced them out of business. Drama ensued. Op-eds were crafted, members of Congress raised a fuss. What resulted was a deal: Pandora, other music streamers, performers and the recording industry agreed to a new set of rates, and Westergren declared “the royalty crisis is over.”
The pace of Pandora’s growth was hypercharged by smartphones. Its iPhone app doubled its user base. What Pandora needed to do was slow down. In 2009, the company enacted a 40-hour-a-month listening cap, a way of limiting how much it paid in royalties without having to sell more ads that might have driven away listeners. There was an uproar. Westergren says he got four death threats.
Pandora lifted the cap in 2011 but reinstated it this year for mobile users. This time, it has more than legions of users to satisfy. It also has stockholders. The company went public with a $230 million stock offering in late 2011, a decision that left Westergren — even with his diminished stake — with stock worth more than $20 million.
Wall Street analysts don’t love the stock; scan the headlines and you’d assume “troubled” or “struggling” were part of Pandora’s trademarked name. Like many tech companies, Pandora is finding it tougher to make ad dollars on mobile devices than desktop computers.
Last fall, the Chicago civil rights crusader and Democratic congressman Bobby Rush hosted a Congressional Black Caucus Foundation panel discussion with a provocative title: “Unsung, Unshaken, and Uncompensated: The Plight of African American Musicians.”