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Pandora faces scrutiny over its mobile advertising revenues


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Bloomberg has a big article on Pandora’s struggle to make its mobile advertising revenues keep pace with the rapid growth of mobile listening on its service. It points to the fact that 70% of Pandora usage happens on smartphones and tablets, yet only 1% of overall US advertising spending is mobile. Meanwhile, the article also highlights the fact that Pandora needs more sales manpower to tap into the local advertising traditionally heard on radio stations in the US, quoting the company’s chief financial officer Steve Cakebread as saying “It’s really tough to grow our sales organization 125 percent year-over-year.” Analysts estimate that revenue from Pandora’s computer-based users is nine times higher per hour than its mobile users. However, the article is optimistic, with Morgan Stanley analyst Scott Devitt as predicting that by 2016, Pandora will be making $40 in revenue per hour of music provided to mobile listeners, versus the $23 per hour it will be paying in licensing royalties.

 

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