An earlier version of this story stated that Pandora had paid $2 billion in royalties to artists and songwriters in the second quarter; that figure refers to royalties all-time.
Pandora’s well-documented struggles to turn a profit continue even though its CEO says the internet music service provider is making strong progress to complete its transformation into a complete music service.
The company’s second quarter performance shows total listener hours growing — chalking up a total of 5.66 billion — but overall active listener numbers shrinking from a year ago. Active listeners were 78.1 million which is down from 79.4 million in Q2 2015, a figure that surprised some analysts that predicted Pandora would increase those numbers.
Pandora reported advertising revenue up 15% from a year ago to $265.1 million even though that was below expectations due to softness in national advertising in the entertainment and telco sector, the company said. Overall revenue for the quarter was $343 million, which includes subscription service revenue and $22.8 million in concert tickets sales from its Ticketfly service.
CEO Tim Westergren, the company’s co-founder recently brought back to guide the online music service through its transformation, says the company’s product development plans are moving forward despite the net loss of $76.3 million, or about 33 cents a share, in Q2. The internet music provider still plans to roll out an interactive subscription service to compete with on-demand services Spotify and Apple Music later this fall. Most analysts don’t expect Pandora to turn profitable until the third quarter next year.
Westergren was upbeat on Thursday’s earnings call and said the streaming services ambitious on-demand service and international expansion plans fall in place with the company’s goal to “deliver a powerfully differentiated music experience to accelerate growth.”
One reason for Westergren’s optimism for listener growth is a new partnership with Uber and its drivers. Within the first three weeks of launch about 55,000 Uber drivers tried Pandora via the Uber integration with average daily listening of over 2.5 hours per user. He said Uber is still in the process of rolling out the app to all of its drivers.
Pandora is paying more in royalties to musicians and record labels this year – a 15% increase – following the Copyright Royalty Board resetting of the per-performance royalty rate at the end of last year. Westergren said Thursday Pandora has now paid more than $2 billion all-time in royalties to artists and songwriters. The Wall Street Journal recently reported the Internet radio service provider spent roughly 52% of its revenue last year on music costs
Meanwhile, the Journal also reported Thursday SiriusXM owner Liberty Media recently bid $15 a share for Pandora but the Pandora board of directors rejected the offer. That values the company at $3.4 billion. Pandora stock closed at $12 a share on Thursday.
