Pandora (P) CEO Tim Westergren told investors last week that Pandora is rarely the first to market with a product, but it's always the best.
After more than three years of speculation amid Spotify's global expansion and Apple (AAPL) Music's high-profile entrance into so-called on-demand listening, Pandora appears to finally be on the cusp of its own subscription-based service that builds on its current ad-free Internet radio platform, Pandora One. Pandora's ad-supported free service has 78 million listeners, the company said.
On Tuesday, Pandora announced that after many months of negotiations it had signed a series of licensing agreements with major record labels as well as more than 40 independent distributors. The agreements with the Merlin Network, Sony Music and the Universal Music Group are seen as essential steps in creating an on-demand service that can rival Spotify and Apple Music.
Conspicuously absent from Pandora's announcement was Warner Music Group, home to Madonna, the Red Hot Chili Peppers, Led Zeppelin, AC/DC and many others. A service without Warner, which does have licening agreements with Spotify and Apple, could severely cripple Pandora's ambitions. Westergren said conversations with Warner Music are continuing and that Pandora hopes to have the label signed for its on-demand service by the end of the year.
"This really was a collaborative effort," Westergren, the company's founder, said in a conference call with Wall Street analysts. "The fact that we have this enormous audience on the platform already, for whom we know so much and for whom we reach in a very contextual and targeted way, sets up an opportunity that no one else has, and I think the industry recognized that in the course of our conversations."
