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Pandora's CEO is doubling down on podcasts

The music-streaming company is currently working on the "Podcast Genome Project."
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By JP Mangalindan

Pandora CEO Roger Lynch wants to offer listeners an easier way to discover new podcasts as the company adds more podcasts to its service and beefs up advertising.

Indeed, podcasts will become a more significant aspect in the months and years ahead for Pandora, which has over 75 million monthly active users -- 5.5 million of which use Pandora's paid features and services. The key to growing those users, according to Lynch, who joined the company in September, is offering a more comprehensive catalog of content.

"In the car, 80 percent of listening is music, while 20 percent is other stuff," Lynch explains to Yahoo Finance. "As a service, if you don't have that 20 percent, it doesn't mean you capture the 80 percent, because then people will just stay on their FM Radios. But if you can create audio content for people that gets packaged with the music content in a way that doesn't give them a reason to go back to that FM dial, then you capture much more than just the spoken word."

However, it isn't enough to just serve up podcasts, which Pandora has offered in bits and bytes for several years now. (Pandora streamed the second half of the hit podcast series Serial as well as episodes of This American Life) The other part of the equation is creating a way for listeners to easily discover new podcasts they might like. To that end, Pandora is currently developing what it calls the "Podcast Genome Project," a massive database not unlike its Music Genome Project that would study and compile the attributes for every podcast in Pandora's library. If you regularly listen to certain kinds of podcasts on Pandora, the Podcast Genome Project would help Pandora understand the similarities among those podcasts and serve up similar podcasts you may like.

Of course, the goal isn't just to reel in listeners, it's also to make Pandora that much more attractive to advertisers as a platform.

Making Pandora a moneymaker

In his first few months as Pandora's chief executive, Lynch has doubled down on Pandora's monetization efforts, particularly advertising, following a slump in 2017 that saw several top-level executives, including former CEO Tim Westergren, depart and the sale of its ticketing service Ticketfly to Eventbrite for $200 million.

Lynch pushed for the acquisition of digital audio ad company AdsWizz for a reported $145 million earlier this year. Pandora is also looking to offer podcasters monetization options that will be superior to the current state of podcast advertising. Currently, many podcasters still rely on ads that they read themselves on air, which Lynch has said isn't the most effective advertising model.

While podcast advertising generated an estimated $220 million in revenues in 2017 -- up 85% from 2016 -- marketers still face some unique challenges, according to estimates from Interactive Advertising Bureau and PricewaterhouseCoopers US. For instance, it's still difficult to track whether someone actually listened to a podcast rather than merely downloaded it -- a challenge Pandora can sidestep since podcasts are primarily streamed on its service rather than downloaded. Translation: Pandora's core business model means marketers can perhaps feel more confident that listeners are actually hearing their ads, making them more likely to spend ad dollars.

If Pandora pulls off its podcast ambitions, it would be a significant step for improving how people discover podcasts and how advertisers target a newer demographic via streamed content. As it currently stands, competitors like Apple Music and Spotify offer podcast charts to scroll through, but they're not personalized to a person's tastes.

"There's nothing personal with that stuff," Lynch explains. "It's just what everybody else does. That's what music was. You know to look at the Billboard chart. OK, what's popular? And then Pandora came out and said we need discovery. That hasn't happened yet in podcasts, but we're going to make that happen."

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