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Pandora listeners grow 59%

April 5, 2012 |  3:46 pm

Pandora's Tim Westergren
Pandora Media Inc.'s stock may have been on the decline, but the number of listeners for its online radio service has kept growing.

The Oakland company said Thursday that the number of active listeners (that is, people who have used the service at least once in the past 30 days) grew to 51 million in March, up 59% from a year earlier.

The amount of time users spend listening also grew -- to more than 1 billion hours last month, from 567 million hours in March 2011. Each Pandora listener spent more time on average with the service as well, about 19.6 hours in March compared with 17.7 hours a year ago.

But the increase in listening hours is a double-edged sword. Pandora must pay royalties on every song its service plays, so as the hours rack up, so do Pandora's licensing costs.

Still, the company could use a splash of good news. Its stock suffered a punishing 19% drop last month after it posted higher-than-expected losses and projected lower revenue for its first quarter this year. It closed down 13 cents to $9.92 Thursday, far below its $16 initial public offering price in June.

Wall Street analysts were heartened by the company's audience gains.

"We’re encouraged by Pandora’s share gains, and we continue to believe the company will improve mobile monetization as the regional sales force expands and audience measurement comparable with radio materializes," J.P. Morgan analysts Doug Anmuth and Shelby Taffer wrote in a note to investors.

But Anmuth and Taffer cautioned against popping the champagne cork just yet. Citing an article in the Wall Street Journal, they noted that major companies could follow Proctor & Gamble's recent move to crack down on employee usage of "bandwidth intensive" services at work, including Netflix and Pandora.

"About 18% of radio listening takes place in the workplace, and we believe many companies already prohibit access to streaming media sites," Anmuth and Taffer wrote. "We would not want to see this become a trend."


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Photo: Pandora co-founder Tim Westergren. Credit: Ryan Anson / Bloomberg