Is Pandora’s Westergren a Pathological Liar?

Why are so many statistics and factoids Tim Westergren, Pandora’s founder, utters a distortion or lie? Is it because he doesn’t understand? Is it because he is misinformed? Or is it purposeful, a willful effort to distort and mislead?

Were he just talking up his service, we could let it pass. The problem is that Westergren seems to go out of his way to talk down local radio, fabricating false and misleading comparisons to denigrate local radio.

So we believe it is time to take a closer look at Westergren’s claims.

Westergren holds Pandora Listener Meet Ups around the country. At a recent Meet Up in New York he offered a long list of radio factoids. These were first reported here, and then repeated on various blogs including here, here, and elsewhere.

Some of his factoids appear absolute gibberish. Either he got his facts scrambled, or the reporters did. Anyone should have been able to realize they were meaningless. Yet the factoids were circulated without a single question or doubt raised.

During the meeting Westergren asserted that over the entire history of broadcast radio, less than 100,000 songs have ever been played. (This may be to counter the criticism that Pandora has too few songs in its library, well under a million.)

A little common sense ought to be enough to shoot this one down. First, only a foolish person would pretend to have an accurate count of how many different songs have been played from (say) 1920 when KDKA signed on.

Joel Whitburn says there have been over 40,000 Pop hits since 1955, over 20,000 Country hits since 1944, and 20,000 R&B hits since 1942. That’s 80,000 hit songs in just three formats.

There are a dozen additional formats including Rock, Jazz, Classical, Easy Listening, Adult Standards, Big Band, Spanish, Gospel, and Religion each with their own music that add tens of thousands of songs that local radio stations play today.

Then there is the low end of the dial. Eclectic and ethnic stations at the non-profit end of the FM dial probably play 100,000 different songs by themselves.

And these are only the songs that can be heard right now. How likely is it that radio has only played 100,000 different songs ever? Zero.

Westergren likes to brag about the size of Pandora’s audience. He recently boasted that Pandora has more listeners in Philadelphia than WBEB. Now that Ando Media includes Pandora in their monthly reports, we can see whether this is true.

WBEB has a total weekly audience (cume) of over 1.6 million listeners.

Total registered users of Pandora are north of 50 million, including the inactive ones. We don’t hear much about how many people are actually using Pandora each week, because the number is considerably smaller, but let’s use the 50 million. Philadelphia is about 1.6% of the US, so that means Pandora probably has about 800,000 registered users in the area.

In other words, the number of Pandora’s registered users in Philadelphia is half of the number of people who listen to WBEB each week, active users considerably less.

WBEB’s advantage gets even greater when we consider Average Quarter Hour, a measure of average listenership. Using the same proportionality, at any given moment, eight times as many listeners are tuning to WBEB than those in Philadelphia who have ever registered on Pandora. (Read more on the calculation here.)

Were these the only misspoken comments Westergren has made about Pandora’s relative strength, one might overlook it. However, it is part of what appears to be a campaign of misinformation and distortions.

When Westergren talks about Pandora, everything seems huge, expressed in millions. Fifty million registered users growing by 85,000 per day. A library of three-quarter million songs. Ninety million songs played each month. Over 150 million session starts each week. Estimates of 70 million custom stations created.

Drilling down one realizes how minimally Pandora touches the average listener. Based on these numbers, it turns out that the average user signs on perhaps three times a week and the average session lasts for just seven songs. That’s it.

One thing that seems to really rub Westergren the wrong way is the SoundExchange royalties Pandora pays. He takes every opportunity to point out that Pandora pays millions to SoundExchange while local radio stations pay nothing.

Westergren recently bragged to Digital Music News that Pandora was about 44% of Internet radio. One might assume that he was talking about market share, but it turns out that he was actually talking about SoundExchange royalty fees. According to Westergren, Pandora pays roughly 44-45 percent of the royalties SoundExchange extracts.

As the comment was picked up by others, the message gained weight. Westergren’s comments appeared under headlines like Pandora has 44% of Internet Radio’s Audience, and Pandora is ‘about 44% of internet radio’ revenues, says founder Tim Westergren. Blame sloppy reporting, but Westergren’s misleading comment must share some of the blame.

Westergren says that Pandora paid $28 million to SoundExchange in 2009. Like other large Internet radio stations, Pandora pays 25% of gross revenue in royalties. In 2009 that should have been $12.5 million. So why does he say the company paid $28 million ($30 million in some interviews)? Maybe because $28 million sounds a lot more onerous than $12.5 million.

Someday Pandora will go public. Westergren and those who financially bankroll Pandora will become a multi-millionaires. Understandably, there is an incentive to talk up Pandora and make it seem bigger and more important than it actually is.

Fair enough.

However, since he seems to have a compulsion to distort and manipulate the facts repeatedly attacking local radio,  it is time for local radio to push back and set the record straight.

Comments

[Richard Harker]

While we welcome all comments and observations, we particularly appreciate those based on the issues raised by the post.

The Ando Media ratings and Quantcast numbers are available for all to see. We didn't challenge those numbers. We didn't even bring them up. So their relevancy isn't clear.

The comments also illustrate too well that there are those who believe in the primacy of Internet radio despite overwhelming evidence that it continues to attract a fraction of local radio's listenership.

Yes, the streams of commercial radio stations are smaller than Pandora's. The majority of people listen to local radio stations using a radio. Each week well over 300 million Americans listen to local radio that way.

[HDRadioFarce]

http://www.quantcast.com/pandora.com

Who's the liar, here?

[HDRadioFarce]

"Pandora again dominates Online Radio Metrics"

"In fact, there are more than 300,000 listeners tuned to Pandora in any given time on average. That's as many as CBS Radio and Clear Channel - combined. And you can take the next 17 groups in Ando's ranking, combine them, and you'd still have to double them to equal Pandora's dominance."

http://tinyurl.com/yjp8fhx

Who's the liar, here?

[Huw]

With the total station numbers, many, many of them would be put together by people such as myself from outside the US who set up stations a few years ago and then were geo blocked from the service. But the stations are still there (if you use an isp blocker you can still access them), and we still get promotional messages from Pandora. I remember the numbers being talked up before geo blocking was put in place, so it's possible several million of these 'stations' belong to listeners outside the US who can no longer access them. Certainly makes the figures look good though.

Be interesting to ask how many of these stations there are.

[Jack Taddeo]

If you set the 'wayback machine' for 2005 you will hear the same outlandish statements were made by a certain CEO of a satellite radio company. It helps to pump smoke up Wall Street's skirt if you are planning a public offering. Of course, at some point you actally have to make something, sell something and collect some money for it. When you can't pay your bills you either go belly-up or "merge" with another player. Thanks for pointing out that most of the chatter is designed to attract cash while bashing traditional media. We know where that got satellite radio.

[Bob Bellin]

"Like other large Internet radio stations, Pandora pays 25% of gross revenue in royalties."

This is flat out wrong. And your points about numbers of songs are irrelevant. Tim is certainly spinning and not everyone who tries Pandora becomes a fan of it. But has become a real phenomenon and many are drawn to its low spot load/customized product.

Radio has many options in response. Spinning the spin and defending the status quo is probably not its best one.

[HDRadioFarce]

Screw you buddy, and the HD Radio Farce. Nothing but personal attacks from the terrestrial radio folks. Pandora is definately making its mark against terrestrial radio, and is headed big-time in-dash. So, get over it - the new wave of "radio" will be these "personalized" music services of Pandora, Slacker, Last.fm, Jango, etc. Terrestrial radio is noninteractive and will never be able to compete.

[Robert Christy]

Pandora sucks!

I have a "station" that is supposed to be jazz-standards, I'll have it on in the office and all of a sudden I hear Bob Segar's "Still the Same"! If Pandora plays Paul Desmond's "Disafinado" it will play Brazilian based jazz for the next 10-12 songs, unless I actively change it. Pandora is not as "advertised"-not close!

[Rod]

I undertsand and you are right about "local" being the key. I just dont see that happening anytime soon. Sure, these statements were made to insiders but it quickly gains speed and gets attention and PR outside of the "radio world". Doesnt matter if he fudge the numbers or not. It doesnt deny the fact that the new generation of listeners are not tuning in to FM radio.

[Annrae]

Internet radio is a living and quickly growing beast that the industry wants to ignore, perhaps with the hope that it goes away. We have an online, entertainment network at WWW.X1FM.COM , with live dj's, instudio HD cameras, all while interacting with listeners. We show music videos, and have well produced, unique on demand content. All from state of the art broadcast studios. We are using all the principles that made terrestrial radio special and compelling when it was done right - before it was completely taken over by corporate greed.
CC's "Premium Choice" programming is a stupid idea. Terrestrial radio is killing itself. Bring back live, local personalities with a genuine music variety and things could turn around. Sadly for lots of great radio people, that looks very unlikely.
Fortunately for us, those are the things that make our future even brighter.

[Ben Maxwell]

Rod,

You're confusing marketing with promotion and positioning statements. Marketing is external, which is what Pandora is doing by holding interviews and through press releases. Promotion is done internally, by the station for the listenership of the station. Positioning statements clarify what the station is both externally and internally.

The death knell for FM Radio was supposed to be Sirius/XM, but that didn't happen. Now it's supposed to be internet radio and Pandora. When FM Radio is done right (local, one-to-one communication) nothing can beat it. Nothing. The challenge is whether or not the people that know how to do FM Radio right will still be in the industry to practice their trade.

[Rod]

Sounds like marketing to me. Something FM Radio knows all about. How many times are listeners lied to? (The #1 hit music station, less talk, more rock, etc.)

Face it.. FM Radio is becoming less and less relevant in todays world. They can offer the selection or content that internet radio does. Too many corporate cookie cutter stations with liner jocks. Smartphones bring C.D. quality internet stations that the joke that is "HD Radio" cant come close to touching.

Sure FM will always be around but the tables have turned and the Radio Revolution is now!