Pandora - the next big thing?

Recently, Pandora – the music streaming service priced its IPO at $16 per share, valuing the company at $2.6 billion. This is the 2^nd time that the musical giant has upped its market cap. The company originally set the market cap of $1.3 billion; but upped the range last week giving the company a valuation of $1.9 billion.

So what is Pandora doing that makes it different from other online radio services? Pandora plays musical selections similar to song suggestions entered by a user. The user provides positive or negative feedback for songs chosen by the service, which are taken into account for future selections. Over 400 different musical attributes are considered when selecting the next song. These 400 attributes are combined into larger groups called focus traits. There are 2,000 focus traits. Examples of these are rhythm syncopation, key tonality, vocal harmonies, and displayed instrumental proficiency.

Pandora provides similar music, not a play-on-demand service. A free account user may stream upto 40 hours per month, and continue unlimited streaming by paying $0.99. That’s pretty cheap!

Still don’t understand the big deal? Well for starters, Pandora is adding a new registered user every second and now has 94 million users. In Pandora’s fiscal year ended January 31, 2011, Pandora streamed 3.8 billion hours of radio listening. In the three months ending April 30, 2011 Pandora posted revenues of $51 million! In the Summer of 2008. Pandora launched and instantly became one of the most top downloaded apps and today, is one of the top five most popular apps across all smart-phone platforms.

In 2009 it was announced that Pandora would be incorporated into the dashboard in Ford cars via SYNC technology; GM has already followed in announcing plans to integrate Pandora into its vehicles’ OnStar system.

Pandora – the next big thing! Pandora, I believe is set to become the next big thing (although it already is in US). It started with a college project (Music Genome Project) like Google and has quickly gained a strong following. In 2008, the founder of Pandora stated that the company may be on the verge of collapse due to royalty issues, but survived the storm to regain its ground.

However its fans (like myself) outside of US continue to wait, as Pandora is only available in the United States. Hopefully, the Pandora’s box will soon open for the rest of the world.

Meanwhile, Pandora follows in the footsteps of Fusion-io, LinkedIn and Yandex, which all increased their pricing significantly prior to going public. And the opening trading price for these companies’ stocks all rose as well. We’ll see where Pandora opens…