Pandora Cofounder Tim Westergren: “We Should Have Done What Spotify Did…”

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Photo Credit: Pandora

Tim Westergren, who co-founded Pandora (as Savage Beast Technologies) back in 1999, recently stated that his company “should have done what Spotify did” in terms of promptly closing licensing agreements with the major labels, regardless of the near-term implications, in pursuit of a broader expansion down the line.

The Pandora co-founder and former CEO made this and other interesting remarks when speaking with Vice as part of a long-form piece, exploring in detail the platform’s early history as a provider of recommendation technology, internet-radio entry, multiple capital-related trials, and ultimate growth into an on-demand streaming service and SiriusXM subsidiary.

Towards its start, the lengthy text charts the role that Pandora played for consumers after pivoting into radio in 2005, including by recommending music to these individuals based upon their listening habits. Factoring for the statutory performance fee at the time of this launch some 16 years ago, Pandora paid just $0.000762 per play, or a little over 76 cents for every 1,000 plays.

The arrangement enabled Pandora to forego closing deals with the major record labels (then the Big Four, prior to EMI’s 2012 sale), but the Copyright Royalty Board’s 2007 approval of a more expensive royalty schedule exacerbated Pandora’s existing funding woes. And despite surviving these challenges, Pandora eventually found itself without a means of competing with the quick-growing music-streaming space.

“There’s many pieces to this puzzle of why I decided to leave,” former Pandora CEO and current Rippleworks exec Joe Kennedy said of his departure from the former. “Among them was the natural strain of having worked with the board for a long time, the strain of being a public company, and this very significant pebble in our shoe of what to do about Spotify and the on-demand business.”

Moreover, Tim Westergren didn’t mince words when describing his thoughts on the timetable associated with Pandora’s entry into streaming proper. “I think that we still squandered an enormous opportunity having survived all [those settlement negotiations] by not pivoting to on-demand fast enough,” said Westergren. “I feel incredibly proud and sort of marvel at what we got through, but I also have a lot of frustration about how we let it slip away after we established such a lead.

“We should have done what Spotify did and ate a pound of flesh to get the industry on our side, then expanded the scope of the product and then really gone global and become an all-you-can-eat service,” finished the Pandora co-founder, who also co-founded a livestream platform, Sessions.

Spotify has quietly broadened its reach in recent years, including by investing many millions of dollars in podcasting, exploring other forms of non-music audio entertainment, and even touting its role as a promotional tool.

Building upon the latter, Spotify and Universal Music inked a massive, multiyear licensing deal last July, and the contract encompasses “collaboration on new, state-of-the-art marketing campaigns.” Four of 2020’s five most-streamed Spotify artists are signed to UMG.

5 Responses

  1. Avatar
    Roberto

    How do you stay in business when you are competing with STOLEN? HMMMMM!! Yes, ONE TRILLION songs stolen on the Internet. A big free for all and all the fans pretty much abandon all the musicians and think that they all should start working for free. Great business model! And great for them of course but not so great for Professional musicians who all have bills to pay and families to feed. Then 70% of the Pros quit the business and are all forced to go out and get day jobs. And the fans really think this is fair? And they really believe that the quality of music will stay the same when suddenly most music is produced by Amateur musicians in their bedrooms! LOL! This new ‘let’s leave the musicians out of the equation’ music business is a disaster for the music business. Too many Miley’s and no more Beatles. Too many Britney’s and no more Pink Floyd’s! The fans have only themselves to blame for this new era of mostly dreadful flavor of the month garbage recorded badly by Hobbyists who have no clue what they are doing and pretty much next to no talent too. 99.99% FAILURE RATE music business is only for idiots who seem to think that they can actually make money creating new music. GOOD LUCK! Just think of all those amazing bands that we could have had in this new era if people had been fair and compensated the musicians fairly for their creative work. The great era for music is over. And it ain’t coming back thanks to people like Mr. Tim Westergren!

    • Avatar
      Keith Washington

      Music business is no longer viable, musicians today have to work odd jobs because the music they create is worthless due to streaming.

  2. Avatar
    BAC

    Westergren was only the CEO of Spotify from 2002 to 2004, and again for 14 months in 2016 and 2017.

    This is a joke of an article. It’s like going back to Larry Sanger and getting his opinion on Wikipedia. Or asking Chris Hughes about Facebook.

  3. Avatar
    Anonymous

    The recorded music business is so dull now. Just a tech machine churning out too many songs and paying out chump change royalties.