[thehme]

Considering that I have bought several CDs because I heard them on Pandora, I am sure everyone is getting money, but it usually is never enough. I don't know what exactly the cost of running a Pandora company means financially, but with all the upgraded, changes, improvements I expect from it, they definitely need money to pay the developers, so that we, the listener can love the music and buy the albums, which I would think is what the artist ultimately wants.

[smacktoward]

> I don't know what exactly the cost of running a Pandora company means financially

Well, Pandora is a public company, so they have to disclose all that stuff. Which means we can look it up! Transparency is awesome.

According to their latest annual report (http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9M...), in fiscal 2012 Pandora brought in $274 million on $285 million in operational expenses.

Of those expenses, $149 million were for content licensing. Product development accounted for $13 million.

Of the money they made, the vast majority ($240 million) came from advertising.

[gizmo686]

At risk of sounding stupid, $274-$285<$0. How does that work?

[endersshadow]

How does a company lose money? They didn't start from nothing--they have money in the bank from equity infusions (e.g.-going public). You lose money if you make less than you spend. That's what happened here.

Edit: Also, these numbers aren't just cash. Revenue is realized when it's earned, not when it's actually paid. So, for example, if Pandora provides $50MM of advertising, and then bills that, it records $50MM of revenue, even if it hasn't received all of that yet. Instead of being counted in cash, it's counted in accounts receivable (commonly abbreviated as A/R). This adheres to GAAP (in the US).

[swalkergibson]

Ideally, the artist wants you to come to their concerts. Even better, they want you to come to their concert, go to the merch table, and buy two of everything they have available for sale. In the traditional model, the vast majority of album revenue goes to the record label. The artist makes the most money from band merchandise sales (think KISS), followed closely by concerts.

If you truly want to support the artist, go to every single one of their concerts and buy three t-shirts.

[RegEx]

Every couple of months, I visit my Pandora profile, go through songs I have liked since my last splurge, and just click the "Buy on Amazon" links all the way down.

[com2kid]

Half the artists I discover are due to Pandora.

I'm guessing I've bought dozens of CDs and gone to multiple concerts thanks to Pandora.