Pandora Case Study

10. Pandora: Disintermediator or Disintermediated? For Pandora, one of the biggest players in Internet radio, figuring out the future is both challenging and intimidating. If the regular challenges of growing a new company aren’t enough, Pandora also faces a market that is reeling in turmoil. In the new digital world, the way people listen to music continues to change dramatically. It seems likely that Pandora will either lead the changes or fall victim to them. Pandora was founded just over a decade ago. At that time, a vast majority of music listeners were still getting their groove on in one of two ways: They either popped a CD into their home, car, or personal CD player or they turned on the old AM/FM radio. But the advent of digital formats like MP3s has had a huge impact on CD sales and has drawn people away from what is now called “terrestrial radio.” Moreover, like the music business, the radio business has faced major changes of its own. The Telecommunications Act of 1996 reduced limitations on the number of stations that one owner could hold. This led to huge ownership groups that consolidated and standardized listening formats. The result is less diversity on the radio, with shorter playlists and fewer artists represented. From one city to the next, all across the United States, radio stations have started to sound more alike. Both these trends – combined with the explosion of Internet usage and changes in online technologies – have led to a deluge of companies trying to capitalize on the future of music distribution. This includes download services such as iTunes, subscription services such as Rhapsody and eMusic, an endless number of Internet radio stations, and even satellite radio network SirriusXM. Today, with an ever‐growing list of listening devices and cloud music services that store personal music libraries so they can be accessed anywhere by any device, listening trends continue to evolve. But one thing about the