Pandora is an online radio service that allows users to create personalized stations based on music genres and artists. It has grown significantly since its founding, with over 75 million monthly active users. However, Pandora faces challenges such as inaccurate user data, increasing competition, rising royalty fees, and a business model that may not be sustainable long-term. While Pandora pioneered the online radio space, its future success is uncertain as other players enter the market and it struggles with monetizing its large user base profitably.

1. THE PANDORA MYTH
“When Pandora plays
Your message works.” “Reach the masses and
the niches.”
“Get an encore-worthy
ROI.” “Personalized listening
and precision targeting.”
“Reaching the right
audience at the right
time.”
Advertising.Pandora.com

3. Evolution of the Audio Consumer & Advertiser

4. • Advances in tech expands listeners options
• Expansion of bandwidth and wireless services
• Advances in smartphone tech mobilize the internet
• As consumer options grow, advertiser’s options grow
• Seamless in dash experience

5. Monthly Online Radio Audience
21%
27% 27%
34%
39%
45%
47%
52%
54%
2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Edison Research Infinite Dial Study/Online Radio = Listening to AM/FM
radio stations online and/or listening to streamed audio content available only the internet
Base: Total Population 12+
Estimated
124
Million

6. Up
45%
AM/FM Local
Stations’
streaming
PurePlay
webcasters like
Pandora
Up
18%
Source:
Proxi Digital Audio Landscape: The Major Streamers
Triton monthly Webcast Metrics Top 20. AAS, M-F 6A-8P Domestic . % change August 2012 vs. August 2013
Internet Audio Usage is Growing
•109 million users
•AM/FM live radio
streams
•Delivering Local
Curated
Programming

7. AM/FM Publishers Continue
Impressive Growth VS. Pure Play
7.11%
0.59%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
AM/FM Streams Pure Play
January 2014 Average Active Sessions (AAS) Monday-Sunday 6a-Mid

8. P’s ad based strategy has been successful
• P has hired great radio
sales people
• With strong radio
client relationships
“We are targeting
radio ad dollars”
-Joe Kennedy

9. P’s ad based strategy has been successful
• Converted AAS to AQH
• Backend ease of
purchase
“We can offer SMB’s a better
return on investment in
terms of foot traffic & brand
awareness.”
- John Trimble

10. What Your Buyers Are Saying About “P”?
“Pandora provides
demographic
and geographic targeting”
“Easier to buy with a
conversion of AAS to AQH”
“Affordable and trackable”
“Pandora is the #1 station in
the Market”
“Good click through rates”

11. Pandora’s Progression
$283.00
$423.40
$598.60
$801.30
Pandora Revenues
2012 2013 2014 2015 $0.00
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
Web Ads Ad Insertion Subscriptions
Product Breakdown
2012 2013 2014 2015
Source: J.P. Morgan based on company reports

12. Pandora’s Net Loss by Year
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
2010 2011 2012 2013
- $1.8M
- $1.6M
- $26.7M
- $40M

13. Pandora’s Market Valuation
0
1
2
3
4
5
6
7
8
2011 2012 2013
$2B $1.75B
$7.09B
$5.05B
2014

14. SWOT Analysis of Pandora
Strengths
Accessibility
Free
Limited Interruptions vs. terrestrial
First to market in pure play space
Strong sales force
More format variety
More variety inside each format
Opportunities
Lower royalty fees
175M registered users
75M monthly active users
Improving registration accuracy
Ask mobile users for location
Weaknesses
Registration
Prompting
IP address tracking
Increased interruptions
Limited growth
Inaccurate self serving metrics
Limited playlist
Unsustainable business model
Increased competition
Limited song skipping
Threats
Terrestrial radio push back
Increased competition in pure play
Inaccurate data on users
Elevated commercial load
Expensive overhead

15. Registration
• Privacy Concerns = Flawed Reg. Data
• Almost 9 in 10 users provide false or
incomplete information
• No prompting to update profile data
• This creates issues with demo, gender, zip
code, and qualitative accuracy
• Reliability
Source: Blue Ink 88% of people who registered on the internet provide false or incomplete information citing privacy issues.
“With a 100% registered user base, there is no guesswork.”
- Advertising.Pandora.com

16. Are You Still Listening?
• Prompting occurs 1x an
hour on desktop (20%
of users)
• Prompting rarely
occurs/never occurs on
a mobile device
• Inaccurate hours spent
• Gross impressions
delivery
“Generates precise ratings based on actual listening.”
- Advertising.Pandora.com

17. Where are you?
• Desktop IP addresses can be INACCURATE
• Reliability of registration process IS
INACCURATE
• Users rarely change cell phone #’s or area
codes when they move
• Cell data is inaccurate
AT&T = NORTHERN CALIFORNIA
SPRINT = KANSAS CITY
VERIZON = SOUTHERN CALIFORNIA
• Cell number portability has made area
code irrelevant
“Pandora’s local targeting means that no impression is wasted.”
- Advertising.Pandora.com

18. P’s Users Frustration Grows
0% 10% 20% 30% 40% 50%
Not enough music discovery
Miss hearing people
Gets boring
Too predictable
Too many bad songs
No local information
Can't skip enough songs
Commercials are annoying
2014
2013
2012
Jacobs Tech Survey 10

19. Monthly Active Users by Quarter
49 53 56
63 67 70 71 73 73
0
10
20
30
40
50
60
70
80
2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1

20. Pandora Financials
0
50
100
150
200
250
2011
Q1
Q2 Q3 Q4 2012
Q1
Q2 Q3 Q4 2013
Q1
Q2 Q3 Q4
Revenue
Expenses

21. Investors Beware
• Unsustainable business model
• Overall registered users are down
• Monthly user base has flattened
• Listener experience has worsened
• Limited playlist
• More competitors
• Royalties increasing
• User mobile data issues