Pandora's Royalty Costs Outgrow Its Revenue

Yesterday was a busy day for Pandora. The company’s CEO Joe Kennedy surprisingly announced his resignation before reporting decent results for the fourth quarter of fiscal year 2013 (Pandora’s fiscal year ends January 31).

The popular internet radio continued to grow healthily in the past three months, but failed to turn a profit. Pandora has 65 million active users and total listening hours increased 52 percent over last year’s fourth quarter. The company now accounts for 77 percent of online radio listening and 8 percent of total radio listening in the United States. Revenue grew 54 percent to $125 million of which an impressive $80 million or 64 percent came from mobile usage.

The main problem with Pandora’s business remains the ever-growing cost of royalties and licensing fees. In the fourth quarter, content acquisition costs grew 59 percent, eating up more than 60 percent of the company’s revenue. After the Internet Radio Fairness Act (IRFA), which would have lowered licensing fees for internet radio services in the United States, didn’t get passed by the 112th United States Congress, Pandora recently reintroduced a 40-hour listening cap for mobile users with free accounts in order to limit escalating royalty costs.

Above chart illustrates the unhealthy relationship between Pandora’s revenue growth and the growth of its royalty costs. It will be interesting to see if the new listening cap will help to limit costs without hurting revenue growth.

Infographic: Pandora's Royalty Costs Outgrow Its Revenue | Statista
More info on this topic
You may also be interested in...

Yes, please send me a daily reminder for the 'Chart of the Day'

Please register for free to receive our daily infographic newsletter.
Download & Reference

More statistics about...
Show more
Who may use the "Chart of the Day"?
The Statista "Chart of the Day", made available under the Creative Commons License CC BY-ND 3.0, may be used and displayed without charge by all commercial and non-commercial websites. Use is, however, only permitted with proper attribution to Statista.

Which topics are covered by the "Chart of the Day"?
The Statista "Chart of the Day" currently focuses on two sectors: "Media and Technology", updated daily and featuring the latest statistics from the media, internet, telecommunications and consumer electronics industries; and "Economy and Society", , which inlcudes current data from the United States and around the world relating to economic and political issues as well as sports and entertainment.

Can Statista create customized charts?
Absolutely! For information on tailor-made and sector-specific Charts of the Day, please contact Felix Richter