'Pandora Acting Like Apple' And Crushing Radio In The Process Pandora is acting like Apple. Spending money to make money. Eventually the record labels balenciaga will have to cut them a fairer deal because Pandora represents the lion's share of music royalty. If they were to fold, the labels and artists would be hurt in a big way.

Pandora (NYSE:P) acting like Apple (NASDAQ:AAPL). That's been one of the big reasons why I am so bullish. Here's a morethandecade old company still running like a startup. And it's going after old guard traditional radio in the way radio used to compete back when it had some true and legitimate fight.

In the 1980s, I was still in grade school. And I was obsessed with radio. By 1988, the year I turned 13, I was actually working at a small radio station in my hometown of Niagara Falls, New York. By 1993, I made the jump to bigger stations in Buffalo. From there, I did not look back. I did not know it at the time, but when I got in, radio was on the tail end of its glory days.

Bill Clinton signed the Telecommunications Act of 1996 and it all went downhill fast from there. Radio became a business run by bean counters as consolidation rendered competition moot. The days of radio as an aggressive industry that took care of its people died and gave way to corporate suits running the show.

There are plenty of reasons to get excited about Pandora, whether you are an investor, consumer or just a plain old fan of radio daze gone by. Of course, the company had to completely change the definition and meaning of an entire medium to make it sexy again. In fact, it had to relegate the very word "radio" to the obsolete bin in the process.

In any event, Del Colliano brings up several incredibly interesting points about exactly what Pandora is doing to build out its salesforce and take it to broadcast radio:

People on the ground in New York say Pandora has hired away at least three major Clear Channel salespeople. People who I am told were making as much as $300,000 plus per year. Pandora is reportedly paying one of the balenciaga bag key Clear Channel recruits a whopping $450,000 plus stock options to sell for them . And they no longer have to suffer fools like John Hogan.

Pandora has hired a major player from Detroit to sell for them also luring him with big bucks. Clear Channel is rolling in dough but won't spend it on radio. Pandora is being choked by music licensing fees and is throwing tons of money around to hire great radio sellers .

Pandora picked off a Citadel seller in Dallas prior to their sale to Cumulus but they did it under the radar. She's now writing business for Pandora that used to go to terrestrial radio.

No wonder why broadcast radio attempts to tear Pandora down every chance it gets.

A couple of thoughts. The first thing that will stick out to skeptical investors "Pandora is being choked by music licensing fees ." No doubt, this is an issue. But, as Del Colliano noted, Pandora has significant leverage here. I expect a much more attractive royalty deal after the current one expires in a few years. It's in the best interest of the industry to ensure not only Pandora's survival, but its longterm health and profitability. I have worked with my share of top radio sales people. At times, they hold more sway inside a radio station than the morning drive announcer. But, as Del Colliano points out elsewhere in his story, they often get treated like crap by terrestrial radio companies. Del Colliano contends that Pandora treats its people incredibly well:

Extensive training. They pay good commissions no funny stuff or take backs that act as disincentives. They use assistants to help with the paperwork so sellers can spend their time selling. It took a musician like Westergren to give salespeople the tools they have been screaming for in radio.

Westergren, as in Pandora cofounder Tim Westergren. No doubt, I will be asking him about this when I interview him later this month. I cannot interview him now because he's at the huge indie music festival in Austin, Texas, known as SXSW. And that's an important thing to point out. It relates back to the issues raised in this article.


Pandora has a massive presence at SXSW, a music festival turned tech and Internet networking event. You're more likely to run into people from companies like Pandora and Google (NASDAQ:GOOG) at SXSW than you are from terrestrial radio and satellite radio's Sirius XM (NASDAQ:SIRI).