Pandora, an Internet radio giant, has had a wild week. Just a few days ago, record labels and webcasters came to an agreement, which pretty much has saved Internet radio.
To top it off, today Pandora has closed another round of funding. They still won’t tell us how much, peHUB is estimating somewhere around $35 million.
A representative from Pandora told me Greylock Partners led the round and was joined by Crosslink Capital, Walden Venture Capital, Labrador Ventures, King Street Capital, Hearst Corporation, DBL Investors and Selby Venture.
This financing comes at a good time, when Pandora had been struggling under a pretty hard royalty structure, requiring the company to pay almost 70% of its revenue to the record labels. If the webcasters and record labels did not come to this recent agreement, Pandora’s fees would have increased by 33% next year – probably putting Pandora out of business.
But nobody wants to see Online radio go away, especially as it’s availability grows while the world adopts more smartphones.
The fundraising news isn’t too surprising for a company like Pandora. We recently spoke with Pandora’s CEO Joe Kennedy in a series of interviews you can find below, who told us the company was expecting sales to double this year, due to the popularity of its iPhone app. The service also draws 6.5 million unique visitors to its website and another 3 million visitors to its mobile applications – nearly 10 million uniques per month.
Along with the funding, we should expect to see some significant changes in how Pandora functions for its users. On July 7, Tim Westergren, Pandora’s Founder laid the changes out in a blog post. Basically, Pandora is going to begin limiting listening to 40 hours per month on its free version. If a user hits that limit, they can opt for unlimited listening for the remainder of that month for $0.99 cents. Westergren says these changes should only affect about 10% of Pandora’s users. The company will still keep its premium version, which offers unlimited, ad free listening but costs $36 dollars/year.
Pandora told us it will use the funding toward continued growth and development.
