A weekday morning at Pandora

Il più bel giornale della Silicon Valley, il San Jose Mercury, svela il dietro le quinte di Pandora, la Web radio che trasmette in sintonia con i gusti musicali dei singoli ascoltatori.

Internet radio tunes in to personal tastes
By William Brand

Article Launched:09/28/2007 03:13:42 AM PDT
(http://www.mercurynews.com/alamedacounty/ci_7025418)

OAKLAND -- It's 10 o'clock on a weekday morning and sunlight streams through high windows of the offices of Pandora.com on the fourth floor of a 1920s low-rise tucked away on 22nd Street. Around the large room, dozens of casually clad employees sit at computer screens, earphones on their heads.
This is the face of Internet radio: There's a pool table and a sign asking employees not to park their bicycles in the hall.
After years of struggle without cash and with little hope, Pandora now has $20 million in venture capital and is the third-most-listened-to Internet station in the United States, according to comScore, an Internet measuring company.
The once-fledgling business hopes to show a profit in about a year through revenue from advertising on the site, providing a bitter dispute with the recording industry about copyright fees can be resolved.
At Pandora, almost everyone is a musician, and they're analyzing the music, taking apart the bones of songs: melody, bass lines and nearly 400 other elements. They then plug each analysis into a massive database. Listeners log on to Pandora.com and create their own personal radio station, listing favorite artists or songs, to be played on the "station."
Pandora's software can develop a mix of compatible songs to stream to that listener's personal station using the database, built song by song, mostly in 128-kilobyte MP3 files, during the past seven years.
Pandora calls it the Music Genome Project, a database of more than a half-million analyzed songs. It's Pandora's twist on the burgeoning world of Internet radio. Estimates suggest there are more than 20,000 Internet radio stations around the world with an audience of at least 75 million, according to comScore. However, the top 20 make 95 percent of the revenue in the United States, reports SoundExchange, a music industry group.
Pandora's co-founder, Tim Westergren, a former Stanford athlete (soccer, ice hockey), said Pandora, with 8 million registered listeners and 2.75 million unique visitors monthly, ranks behind only Yahoo Music and AOL.
Other Webcast-only stations in the top tier include AOL, Live365.com, Last.FM, Rhapsody and MTV Online, according to the Digital Media Association. Each has a different approach.
For example, Yahoo lets users set up a station at no cost and offers a more sophisticated version for a fee. London-based Last.FM, recently purchased by CBS, analyzes the music collection on a user's computer to determine what he or she likes, then plays tunes for free.
But, Westergren argues, only Pandora offers free music, tailored to what the listener wants to hear. A single person can create as many as 100 stations, each with a different mix of favorite artists or songs, and share them with friends. There's a button on each song to allow a listener to buy the song from iTunes or Amazon.
The music goes nonstop until the user leaves the site or shuts down the computer. The software slides in music from many sources, including songs from independent and small-label performers. The listener can rate songs, trash them or fast-forward to the next song.
Pandora has signed a deal with Sprint, which is offering Pandora.com to its mobile phone subscribers for an extra fee.
There's one major obstacle, however: The U.S. Copyright Royalty Board ordered a sharp increase in the rate Internet stations pay for songs, an increase so severe that some say it threatened the existence of Internet radio. "It would take 70 percent of our income," a Pandora executive said.
There was so much outcry that bills to reverse the decision are pending in the Senate and House. The House bill has more than 140 co-signers, including most of the Bay Area congressional delegation.
The looming legislation sent Internet radio and the music industry into negotiations. Both sides said this week that they're hopeful for an equitable settlement.
Westergren, who worked as a musician with his own band, Yellowwood Junction, and wrote music for independent films after earning a political science degree from Stanford, co-founded Pandora eight years ago with two friends, Will Glaser and Jon Kraft.
It was a heady time. "We got some seed money and we hired about 16 full-time people, plus 40 musicians," he said.
Two years later, they ran out of cash as the Internet boom was imploding around them. "At our worst moment, we were being evicted from our office, sued by four employees for back pay," Westergren said. "We owed almost $1.5 million in back salaries. We were living on credit cards. I was making plans to go to Mexico."
Instead, he went on the road, meeting potential investors, making constant pitches.
Finally, Larry Marcus, managing director of Walden Venture Capital in San Francisco, got on board, followed by Labrador Ventures in Palo Alto. Funding finally came on his 348th pitch, Westergren said.Pandora's listeners e-mail constantly, and Lucia Willow, a musician, who holds a master's degree in Library and Information Science from San Jose State, answers every inquiry. She said one surprise was that many elderly people are among Pandora's listeners.
"People in their 80s -- the oldest person was 93 _-- write in and say, 'I know I'm not in your target demographic, but I love your station.' One said, 'I'm dancing to the music of Benny Goodman at the Hollywood Palladium for the first time since I was 29.'"
"No radio station plays Benny Goodman anymore," Willow said. "But we do, right along with 50 Cent."