Pandora financials, biz model

LOOKING IN PANDORA'S BOX: Streaming-radio leader Pandora reported losses of $28.6m for the quarter ending April 30, despite a 55% increase of revenues to $125.5m. Advertising revenue jumped 49% to $105.1m, while subscription and other revenue rose to $20.4m, a 55% increase, but couldn't stay ahead of expenses. Despite the losses, the company's stock leapt 9.3% after Thursday's close of market to $18.75. Meanwhile, Digital Music News wondered aloud about the company's business model, since placing a cap on free listening, as the service did in Q4, resulting in a 114% increase in paid subscriptions (700k new ones in just three months)--but the company's acting CEO, Joe Kennedy (whose replacement has not yet been announced, despite his imminent departure) told shareholders the company intended to leave paid subs as a tier and continue to rely on ad-supported free listening. "Pandora's existing business model isn't working," declares DMN's Paul Resnikoff, "and the company isn't making enough money to cover artist royalties." Resnikoff argues that it's artists, rather than listeners and advertisers, who've been keeping Pandora's lights on--and recommends less lobbying of Congress for royalty relief and more emphasis on enforcing paid subs. Yet some online commentators have endorsed Pandora's path, given that forcing users to pay beyond a certain listening threshold does cause some of them to leave in search of free streams elsewhere, and note that its increases in overall listeners and ad revenue are a positive sign. One thing's for sure: Whenever Apple's iRadio debuts, it's going to change the field for everyone. (5/24p)