You know the myth. Pandora, a fallible human created by the gods, opens a box without knowing the full consequences, and her actions change the course of civilization. The metaphor is often misapplied—but in the case of Pandora, the internet music company, it may find a dark fit.
The company began in 2000 as Pandora Internet Radio, an online, ad-supported listening service that brought forth a revolutionary idea: giving users automated music recommendations. Massive were the waves it made.
Before Pandora, fans had to seek out new music all on their own on the internet, and large-scale listening platforms like Apple’s iTunes were just starting up. Pandora struck deals with auto companies, worming its way right into car dashboards to compete directly with terrestrial radio. It won the hearts of many listeners who became enamored with its easy, passive music-discovery service that could run in the background as they browsed other webpages or walked away from their computers to do other things.
But music fans are fickle. Pandora has repeatedly cut its workforce amid dwindling revenue reports in the last few years, even as it launched new products, and has sought outside investment from satellite-music company SiriusXM, which grabbed a 19% stake last month in exchange for a $480 million investment. Even amid rumors of a buyout, its stock continued to tumble.
And yesterday, it was revealed that Pandora’s co-founder and CEO Tim Westergren is stepping down—a foreboding-enough sign. Pandora’s stock rose 1.9% today on the news to around $8 a share, though it is now a fifth of where it was at its peak in 2014. Last summer, John Malone’s Liberty Media offered $15 per share to buy Pandora for $3.4 billion, which was rejected by Pandora’s board.
What happened, between 2000 and now? Pandora’s slow death is not an unfamiliar tale in the entertainment industry. A company introduces a novel idea, and then it’s beat out by bigger and better companies that take that idea to the next level. Yet with Pandora, the story is particularly sad. It seemed to sit idly by, unaware of its full potential, as Spotify, Apple Music, and the new wave of on-demand music streaming services took its core ideas of instant delivery and automated recommendations and used them to topple Pandora’s internet radio empire.
In late 2015, Pandora—playing a game of much-too-late catch-up—spent $75 million on streaming service Rdio, and in late 2016, it proudly unveiled Pandora Premium, a subscription service meant to complete with the likes of the streaming giants. Not even a month later, it was forced to lay off 7% of its US workforce. The company still reports around 80 million active users, but only 4 million of those are on the paid tier, with the rest freeloading off the original, ad-supported service. (Compare that to nine-year-old Spotify, which boasts 140 million users, 50 million of them on a paid tier.)
With Westergren’s departure as CEO now, the odds of long-term survival aren’t in Pandora’s favor, and the Greek tragedy will likely continue unfolding before our eyes.