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Dialogues

Tim Westergren

Mitch Tobias

Pandora’s Boss

    When Tim Westergren founded Pandora, he never knew he would become an activist and the face of a movement. Westergren created the Music Genome Project—technology that recognizes patterns and similarities in music. He used that technology to create Pandora, a phenomenon in the world of Internet radio. Pandora creates personalized stations based on each user’s  music taste.
    But Pandora—and Web radio as a genre—has been teetering on the edge of extinction. Sound Exchange, the nonprofit representative for record labels and artists, nearly tripled the fees for Web-based radio, a rate hike supported by the Copyright Board that prompted AOL and Yahoo to shut down their Internet radio.
    But Westergren, who would be forced to pay $17 million of the $25 million Pandora grossed last year, by mid-winter was refusing to give in. On behalf of Internet radio everywhere, he was fighting back.

How did you come up with the idea of Pandora?
    I played in rock bands for about 10 years after college, so I was kind of a needle in a haystack along with everybody else. Since then, I’ve been interested in how you solve that problem and how you create some channel to promote more than just a handful of musicians, which is the nature of the music business.

Did you ever imagine you would be a pioneer activist for Internet radio?
    When I first launched the company, I didn’t think it would be a radio. We thought it would just be a technology that we’d license to other sites. I do feel like now we have an important mission. I’m not sure that I can say that I had a mission when I started. There was a problem that I thought we could solve for musicians. With the technology, I thought we could build something really interesting and valuable. But now I feel like we’ve actually got like an important role to play to keep this industry from self-destructing.

After your initial business model failed, how did the radio idea come about?
    What led us to radio was a bunch of things. Obviously our initial idea was not working out. Then, radio is a big business industry—much bigger than the retail industry, like three times the size—and our technology was really well suited to it, just the engine that we built—the song analysis. The database that we had was great for building playlists—a perfect match with that. Then the third thing was, radio is really broken, and there’s an opportunity because [people are] not alone in being pretty disconnected from radio.

What’s the status of the Internet Radio Equality Act?
    It’s just waiting in the wings right now. We [the Digital Media Association] are negotiating right now with the collection of rights holders, and that’s all kind of in the shadow of the bill and the lobbying that we’ve done. We’re hoping we can figure it out through negotiation. If we don’t, then we’re going to go back to the bill, public pressure and such.

How did satellite radio get off easy in its royalty fees?
    There’s no good answer for that. They got a better deal. Their deal was [to pay] 7.5 percent of their revenue [in royalties]. … But we’re going to pay 70 percent of our revenue this year. So it’s a real travesty.

Is there a Plan B to create more revenue to pay the increased royalties?
    This has to be solved, this rate itself. There’s no good answer like charge people more money or find a way to monetize it. That’s not the answer. The rates have got to get fixed. If there’ll be a future for webcasting, these rates have got to be made reasonable.

 Are you still wowed by how big Pandora has become?
    It’s hard to describe. Everything from how fast it’s grown to the correspondence we get, the feedback we get when we meet people in person. I do these town hall meetings. I travel, and we invite Pandora listeners to get together. I’ve been to Biloxi, Miss., and Nashville and New York and Boston and Miami and Portland. Everywhere. … And when you come to these things, it’s like a musical revival. People in the room feel like they’re back in the game again.

What’s it like to have hundreds of people at your town hall meetings?
    It’s moving and it’s motivating. … It’s great when well-known artists speak up and say, ‘I like what you’re doing.’ But to me, what really lights my fire is that there is a musicians’ middle class somewhere in here. You know, we buy CDs from kids on the corner around here. How great would it be if those kids had exposure to make a living? Just to make a living. Not to be big rock stars, but make 50 grand a year from their CDs because they got on Pandora and a million people heard their music and they sold 10,000 CDs. Or when they did their shows and instead of 30 people coming, 300 people came. That’s a cultural phenomenon. That’s not about a business, that’s about a change in the role of music in society. That’s what really gets me going.