Founder of Pandora Internet Radio Speaks at McDonough School of Business

After graduating from college, Tim Westergren spent years searching for a way to combine his love of music with a career. Two experiences during that time would plant the seeds for the Music Genome Project, which eventually led to the founding of Pandora Internet Radio.

While touring the United States in various bands in the late 1980s and early 1990s, Westergren witnessed firsthand the challenges musicians have in building an audience. He said that he became aware of a sea of talent of which few others had knowledge. Later in the 1990s, he honed his ability to figure out the musical tastes of others while he was writing music for films, television, and commercials.

“I developed a pretty good ability to figure out what someone liked that I could then translate when I went back to the recording studio into a new composition. What I was really doing was developing the concept of a genome, a music genome,” Westergren, the founder and chief strategy officer of Pandora Internet Radio, told an audience at Georgetown’s McDonough School of Business October 15. He was on campus as part of the business school’s Distinguished Leaders Series.

The Music Genome Project is an ongoing effort by a team of trained musicians to analyze approximately 400 attributes found in music in order to classify songs as similar or dissimilar. Using this technology, Pandora Internet Radio recommends songs to listeners based on music they previously selected. In addition to matching songs to one’s musical tastes, Pandora is known for exposing listeners to non-mainstream music that matches their preferences.

While the company is a hit today, with 36 million registered users and 65,000 new users signing on daily, Westergren told the audience that there were two points in history where the project almost was shut down. The first was when the Music Genome Project ran out of investment money in 2001, and the second was when record labels tried to triple their licensing fees. The first hurdle was overcome through the dedication of a staff of 50 people who worked for free for two and a half years to keep the Music Genome Project going, and the second was resolved this year when a new agreement was reached with the record labels after years of debate on Capitol Hill.

Westergren answered questions from the audience, explaining how the free subscription service earns revenue from advertising and partnering with products such as the iPhone, and how he, as the founder of Pandora successfully turned the CEO reigns over, which Westergren did in 2004. As a result, he said that Pandora has become the subject of a Harvard Business Case Study.

He also advised students who are interested in music to consider using their business skills to become a digital music manager. “It’s about strategy and marketing. The opportunity is there to become a one-man or one-woman label,” he said.

Now that they are well financed, Westergren said Pandora is looking to completely change radio by “pointing the company toward being better than any version of radio.” In the future, look for Pandora to expand beyond the Internet and the iPhone to devices such as automobiles, Blu-ray players, and televisions. The company also is exploring ways to grow globally, which has been hindered by international licensing laws. Finally, Westergren wants to return to his roots by creating a version of Pandora specifically for artists by turning the data they are collecting about listener preferences into a valuable marketing tool that shows artists where their audiences are, where they should tour to, and promotes events to local listeners.

“There are the makings of a musicians middle class if we can connect those dots,” he said.