[chollida1]

Poor Pandora and their investors. This is for about a quarter of what they were worth just 4 years ago.

Saddly this is almost all self inflicted.

While Spotify, Apple music and Google music really worked hard to get people to actually pay for the service Pandora continued to act like it was a VC backed company in hyper growth mode long after that was the case.

They fought with the record labels longer than most of their competitors did to their own determent and they didn't end up getting any concessions for their extra effort.

And when everyone else was letting you select any music you wanted in playlist, they insisted on staying radio style only.

[treis]

>Poor Pandora and their investors. This is for about a quarter of what they were worth just 4 years ago.

They also got 3.5 billion for a company that hasn't made any money in its 18 year existence so it's hard to feel too bad.

[rubicon33]

Being a business noob, I've got to ask - How exactly does a company that makes nothing in 18 years, get acquired for 3.5 billion?

[seabrookmx]

I'm a bit of a noob here as well, but my stab at it would be:

1) They have lots of customers. I work in the music industry and have insight into how much money Pandora brings in. They might not be _profitable_ but there's definitely a lot of cash flowing there, meaning profitability isn't out of the question.

2) Technology and fit with existing business - SiriusXM has lots of curated and exclusive content. With a Spotify-like platform in Pandora, they can get some of that content infront of more streamers and diversify Pandora. The only streaming service with Howard Stern, and the only one that you can stream directly to your car over Sattelite without using data? That's compelling for a lot of people.

[cirnine]

Pandora brought in $1.4 billion in revenue in 2017, and will have even more revenue in 2018.

Of course, licensing rates means that the company only gets to see a few hundred million of that, and a significant portion of that needs to go to advertising sales personnel -- audio advertising is incredibly hands-on compared to other forms of internet advertising.

As an aside: it was interesting when the stock cratered last year to the point where the market cap of the company was lower than its annual revenue -- all the revenue in the world doesn't make up for negative margins.

[traek]

> As an aside: it was interesting when the stock cratered last year to the point where the market cap of the company was lower than its annual revenue -- all the revenue in the world doesn't make up for negative margins.

Yup, revenue doesn’t really mean anything; Walmart’s market cap is less than their 2017 revenue.

[mcny]

People always yell at me when I say this but what if we lower corporate tax rate and tax revenue instead of profits? Does it encourage companies to get even bigger and do everything in house?

[lazyjones]

It takes a competing company that is actually (very) profitable and believes it can successfully monetize the 70 million users Pandora claims to have.

My gut feeling is that this will be one of countless such acquisitions that‘ll turn out to be bad for both users and the acquiring company in the next couple of years. There‘s a reason why Pandora isn’t profitable in a market where others make 100‘s of millions in profit every year.

[forkLding]

Business valuation is usually a multiple (3x, 5x, 10x) multiplied by a certain metric such as revenue, net income (can be before tax and interest) or free cash flow with considerations for growth. [Can also include current market cap if they're public or previous estimated valuations as benchmarks]

Plus or minus any assets that can be made liquid/sold for cash which haven't been depreciated totally or can be still used by the new company.

Strategic considerations also factor in customer/user base, current relationships with buyers/suppliers, technical know-how and market share which can boost or decrease the valuation.

Liabilities and the general riskiness of the transaction/merger such as debt can also factor in, so a financially healthy company is worth more.

After all that, it will depend on negotiating power/how much SirusXM wants Pandora and if there are also other potential buyers bidding for the company. If say Apple Music started bidding for Pandora, SiriusXM and Apple Music could keep one-upping each other so that the price increases.

You can google things like Enterprise Value, Discounted Cash Flows, etc. but they're a bit advanced and based on the principles I've mentioned.

[roymurdock]

users, and their generated data along with the potential to monetize whatever service they are consuming, is the new "revenue"

they can also integrate the tech to be more competitive, or they can shut the service (currently a competitor) down and hope to pick up a portion of those listeners

[EpicEng]

Pandora brought in $1.4 billion in revenue in 2017. Actual revenue is also revenue.

[iammiles]

> And when everyone else was letting you select any music you wanted in playlist, they insisted on staying radio style only.

This is really the nail in the coffin. After a couple days on a Spotify trial, I converted to a paid Spotify account. The only reason I logged onto Pandora after converting was to get the list of my favorited songs to add to my playlist on Spotify.

[MrEfficiency]

Radio was cool but they repeated songs too much. The thumbs up and down would ruin the radio algorithm.

I would thumbs down live versions or comedy skits, then it would skew the entire system.

This was years ago.

[freehunter]

Yeah last time I used Pandora, every station would inevitably turn into "freehunter's favorite songs". Rap station? Well Run-DMC did a cover of Walk This Way, and Linkin Park is kind of rap and Beastie Boys did a lot of rock songs, and now suddenly I'm getting a lot of rock in my rap list, and rock melds into pop pretty easy, and now suddenly my rap playlist has Katy Perry and Kesha.

And thumbs down is always way too harsh in any algorithm you'll find, because there's no way of telling the algorithm why you didn't like it. If I thumbs down Thunder by Imagine Dragons, how does it know I really do like Imagine Dragons and that album was good and the genre was good, I just don't like that one song? And if I thumbs down Good Riddance by Green Day how does the algorithm know I love Green Day and I like that style of music, but I just have a really negative emotional attachment to that song and I don't want to cry right now?

Context is super hard but super important. I listen to a lot of ambient music at work and now my Apple Music and Spotify suggestions are all ambient music, even though I don't listen to that genre for pleasure.

[stubish]

While I haven't used Pandora (it isn't available here), you seem to be describing my experience with Spotify's various playlists. With no personal context or ranking, the algorithms have nothing to go on except how many other people liked or repeated a song. Other people have awful taste, and seem to love to put songs on high rotation that I find mediocre.

And without decent playlists and music discovery, why would you pay a monthly subscription instead of once-off fees for music you like?

[umichguy]

I wish the algo changes the preferences based on the time etc. S, if you can set "work hours," or label it that way, it will play the sort of the music you like during those hours, while something else for other times. You can have multiple "moods" set - one for commuting, one for partying, one for night time etc.

[espeed]

I haven't used Pandora in years and Spotify almost never. I use SoundCloud sparsely, on occasion when someone posts an indie or to listen to podcasts like a16z. But for everyday use, I use Google Music or YouTube / Music.

Years ago I spent a week recreating my long lost high school and college CD collections on Google Play was able to find almost everything, even some of the most ecsoteric remixes.

And when entertaining, people always gravitate towards DJing through YouTube videos on the TV, and so I wired everything up with Chromecast / Chromebook pairs to make it easy. Even though they can go to any app/site they want, everyone uses YouTube.

[bpick]

Pandora spent much more effort attempting to get me to sign-up (and re-sign-up) than they ever did trying to retain me.

The customer service experience was harrowing, featured slow response times, an indifferent attitude to my issues and a wholly inadequate resolution leading me to quit the service.

Every so often I would see news coverage about them struggling and all I could think was, "guess things on the customer service side haven't changed."

[thehashrocket]

I feel this way about Sirius/XM. It was such a hassle to deal with them every 6 months or a year to get a better rate when it came up for renewal. It just didn't feel like it was worth it anymore. And once I finally left they would snail mail me offers to come back constantly. I couldn't help but think that all that money spent mailing me to come back could have been spent just providing a more affordable service in the first place.

[chrisbro]

I was about to say, if naggy and poor customer service is a hallmark of Pandora, then becoming a part of SiriusXM will be a match made in heaven (hell?). When I finally decided to drop SiriusXM and called in to cancel my account, it took me something like 20 minutes worth of begging the phone rep to just never let me have to pay their company money ever again. They spent the entire time questioning how I used the service and trying to forcibly get me to sign up for some lowered rate for x months. I will never purchase something from them again.

[CamperBob2]

Just tell them you've been sentenced to prison, or are dying, or something like that.