Pandora Radio's Tim Westergren on Congress, Spotify, and Emily White
Photo: Courtesy Pandora Radio.
Ten years ago, as funding for his three-year-old company began to disappear, Minneapolis-native Tim Westergen had a serious discussion about betting Pandora Radio's last $25,000 on a game of roulette.
"It was actually pretty rational, believe it or not," says Westergen, Pandora co-founder. "Raising money at that time had become so difficult in Silicon Valley, the odds of going into gambling were actually significantly higher than financing through venture capital."
He ultimately decided against it -- the consequences of losing investments in Reno outweighed the reward -- but going the safe route ended up working out pretty well. Eight years later, Westergren would be named one of Time Magazine's 100 most influential people on planet earth. Today, Pandora has more than 150 million users across the country.
But recently, Westegren has picked up rivals in emerging companys like Songza and Spotify, which, according to a recent New York Times article, will compete with Pandora for listeners and advertisers. Pandora is still by far the leader, writes Times reporter Ben Sisario, but "the question, as a clutch of new competitors arrives, is whether it can hold on to that dominance."
We caught up with Westergren last week to talk about the new competition, his thoughts on Emily White's controversial NPR column, and why he's been lobbying to Congress.
What bands are you listening to lately?
Ben Folds is really doing it for me these days. I listen to him, and on Pandora, his station introduces me to a lot of music that I like. It's a great fertile discovery ground for me. I'm all over the map. I listen to Oscar Peterson, and I'll listen to Green Day, I'll listen to Coldplay, Sarah McLachlan. I'll listen to Bach, you know, some classical music...I like the sort of alternative rock scene these days as well, and I've actually taken a real liking to country lately.
Anyone in particular?
I like The Band Perry. They've got a great sound. I've always been a fan of the Dixie Chicks. Keith Urban. I also like some more classic country -- Johnny Cash stuff, too. I've really come to appreciate the song writing of country. I'm a songwriter by trade.
And you grew up wanting to be a musician?
I started playing piano when I was about seven years old, and I just really fell in love with the piano. I wound up playing piano for years and years, and eventually kind of studying music, and then I spent all of my 20s playing in rock bands and trying to make a living of it.
Was that in Minneapolis, or had you moved away by that point?
I left Minneapolis when I was a kid, and I moved overseas for a while. And then I came back to the U.S. for my late teens. I was in Michigan for a while, and then out to California. So I've traveled a lot. I come back to Minneapolis all the time, I have a lot of family there, but it's been a while since I actually lived in Minneapolis.
Did you get into any local bands here?
I hadn't developed my rock 'n' roll taste yet. Although when I was in high school, I certainly followed the Prince craze - the whole Purple Rain phenomenon and everything.
There's been a story that's circulating lately about Emily White, an NPR intern who wrote a controversial article about how she's only bought 15 CDs in her lifetime, but has about 11,000 songs on her iTunes library. Do you have a take?
Well look, I do think that copying music is wrong. I think it is stealing. I do believe that. I think though, as far as how the industry responds to it -- I think the way to respond is to find a way to give people what they want, and build a business model around that. And I think a cornerstone of that is radio, because radio remains the primary pipeline that people have to music. You know, 80 percent of the time people spend with music is still spent listening to radio. Even with all these 11,000 song MP3 players. And the problem is, radio has not historically paid performers, and on the Internet that's not true. Web radio pays both composers and the performers, and I think personalized radio especially provides a satisfying experience for people who do not spend any time on music, but they are effectively contributing to music because artists are equity holders in Internet radio.
You went to Congress last month and told them they need to "level the playing field" in terms of royalties radio stations pay. Can you explain that?
Different forms of radio pay pretty radically different levels of royalties. In particular, on the digital side, we compete with XM Sirius and cable radio. Last year Pandora paid over 50 percent of royalties in performance fees alone.
By contrast, satellite radio paid seven-and-a-half percent. And we also compete with broadcast radio, which doesn't pay performers at all. It's completely exempt from this fee. So it's an incredibly inequitable system for royalty payments. So we're looking for Internet radio to be treated more fairly, essentially. Right now it's badly discriminated against.
You've picked up a few competitors lately. Songza seems to be becoming more popular, and so has Spotify. Have you seen a decrease in Pandora users?
No, there's been no impact on us.
Are you sweating it?
Our principal competition is really broadcast radio. That's where all the listener hours are. They have something like 90 percent of the radio time still. So when we look at where the hours are that we want, they're really more in the broadcast realm, that's kind of what we think about. And, you know, doing what we do to personalize listening is really, really hard. It's harder than it looks, and we've been focused on this for about 12 years now. So we're not particularly concerned about other Internet radio offerings so much. We're just trying to focus on, 'How do we make Pandora as easily available and as accessible as broadcast radio is?' Because broadcast radio still dominates this market.
What's next for Pandora?
Going global is a big deal for us. Right now, we're stuck in the U.S. because of licensing. So that's a big thing for us. We've been trying in lots of countries for a while. And otherwise, it's really about, 'How do we make Pandora easy to use everywhere. In every car, in every home?' There's well over 650 consumer electronic devices now that stream Pandora. We want to keep growing that. We want Pandora to be a standard feature on every car that hits the road.
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