About 50 percent of those who listen to radio online listen to Pandora. The first set of paperwork required by the SEC has been filed by Pandora for an initial public offering. The prospectus was filed Feb. 11, 2011. The Pandora IPO is expected to raise about $100 million.
Stockholders to own Pandora after IPO
The Pandora initial public offering has been set in motion with an initial filing with the Securities and Exchange Commission. An SEC approval would mean that Pandora could start selling company stock, which would take place in six to eight months from now. Estimates say that Pandora would be able to raise about $100 million by selling stock in the company. Stockholders would own Pandora, its Music Genome Project data and its library of 800,000 songs after an IPO.
The beginning of Pandora
In 2000, what is now Pandora started the Music Genome Project. For five years, the company categorized all the music it could get its hands on. The form, fashion and style of groups were recorded, analyzed and labeled by musicians the company hired. Spreading new music to listeners was Pandora’s main goal. In 2005, Pandora started streaming music online and helping listeners find music based on what they said they liked. It now makes the majority of its money from advertising.
Financial burdens facing Pandora
Pandora’s largest expense comes from buying music licenses, and that is what led to the IPO. About 60 percent of Pandora revenue is used on licensing alone. The fees to get the music are pretty high. Currently, only about 3 percent of Pandora users actually pay a membership fee. The service is used by the other 97 percent of those on Pandora to listen to the 40 hours a month of free time they are allowed. There are Pandora competitors out there trying to fight their way to the top. However, the Music Genome Project is only available at Pandora.
LA Times: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/02/pandora-ipo.html
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