The music industry is in flux. The year 2010 brought the lowest album-sales weeks ever recorded and countless torrent sites that leaked music freely to the masses.
After a decade in decline, record companies need to rethink how the industry works. One way for companies to reboot is through Internet radio.
Pandora has become the shining beacon of Internet radio and commands a legion of devout followers. In the past few years, Pandora has transformed from a small Internet radio station to the go-to for all your music needs.
Even with little help from the music industry, Pandora could become the driving force for music.
Pandora allows users to create customized stations by entering an artist or song they want to listen to. The site then plays songs that are similar to the user’s choice. The way it generates these playlists is through the Music Genome Project, a program that creates playlists according to the type of artists or songs the user is listening to.
The more information Music Genome gathers from its users and popular playlists, the more it can accommodate to everyone’s taste in music and statistically calculate other songs users will like.
“Our intention,” said Tim Westergren, founder of Pandora, “is to build a radio business that looks a lot like the traditional radio business, with a scalable mechanism for selling national and local advertising so we can do everything from big, branded national campaigns to local pizza joint specials.”
By advertising locally, Pandora has gained momentum with small businesses. These businesses reach customers through banners produced by Pandora. Though local radio does this exact same thing, advertisers on Pandora pay less for ad space on Pandora while connecting users straight to their websites.
As of July 2010, more than 60 million users have registered with Pandora. That puts Pandora in a similar Internet category as Twitter (75 million users).
Regular radio boasts about 230 million listeners, but that is made up of the hundreds of stations in the United States. Pandora, on its own, has 60 million users at its fingertips. For advertisers, that is big business. At any one time, 500 advertising campaigns can be used.
Through word-of-mouth marketing, Pandora has become a dominant force on how people listen to music. The website is used in bars, clubs and parties, as well as for lounging around the house.
“It’s all purpose really,” bartender Kerri Liska said. “It’s always playing at the bar and its much more useful than iTunes since we have access to any song imaginable.” People want access to all kinds of music all the time.
Users have been responsive to Pandora because of its stress on discovering and delivering new music.
“Pandora is so useful,” said Chris McCabe, an ASU junior. “I can just insert any song name and it (Pandora) plays that song plus other songs I might not know. I’ve found so many new bands and songs from Pandora.”
In addition, Pandora is working directly with artists, something not many music programs have done. Pandora has set up listening parties, celebrity Pandora playlist stations, and even advertises concerts for artists.
These specialty services are sponsored by the big advertisers, which help the artists market themselves through different products they may not have had the chance to work with.
Bands such as Dave Matthews Band and John Mayer release material specifically on Pandora, which has seen increased site traffic and advertised their concerts and albums.
"For the first time, artists are going to get to participate in the radio advertising revenue business," Westergren said. "It's a huge business that has been walled off for musicians."
Reach the reporter at jgwynn@asu.edu
