MG Siegler and I ran into Pandora CTO Tom Conrad on Saturday evening at dinner gathering in San Francisco. He was still glowing from all the good news at his once troubled startup: a reasonable settlement around online streaming royalty rates quickly followed by a healthy round of funding that should take the company to profitability sometime next year.


We waited patiently until Conrad was 3-4 cocktails in and then pounced, dragged him outside and stuck a camera in his face. The result is above.

Clearly Conrad was still too sober to tell us all the juicy details. But he did once again confirm the funding and he gave some updated Pandora user stats – 30 million registered users, 12 million monthly uniques and 7-8 million iPhone app installations (plus 2 million more on Blackberry).

Toasts all around. Pandora is still standing, and making music lovers everywhere happy.

Full transcript is below, care of SimulScribe:

INTERVIEWER: I’m here with Tom Conrad, the CTO of Pandora.

Mr. TOM CONRAD (CTO, Pandora): Hey, Mike. How are you?

INTERVIEWER: We’re just all having dinner inside. Actually, MG(ph) is here as well. So, we dragged you out here to the middle of the street to get some information from you…

Mr. CONRAD: You’re going to need a waiver from that guy.

INTERVIEWER: We need some information on this funding…

Mr. CONRAD: Yeah.

INTERVIEWER: Because you’re not saying much. You gave us confirmation last night but it is really not much. So, we want a little bit more from you now. So, tell us like – first of all, the south exchange settlement, like, what happened there exactly…

Mr. CONRAD: Yeah.

INTERVIEWER: Because at this time last year, everyone thought you guys were done.

Mr. CONRAD: Yeah. So, we’ve been – I guess, two years and four months ago, not that we were counting, this royalty rates decision came down from the Copyright Royalty Board that adjusted the statutory licensing rates for internet radio up by basically a factor of three to the point that everybody on the webcasters side and frankly a bunch of the more enlightened people on the rights holders side agreed like internet radio couldn’t survive these kinds of rates. And so, for the last, you know, almost two and a half years, we’ve been kind of…

INTERVIEWER: Waging a PR and legal battle.

Mr. CONRAD: Yeah. Kind of constant negotiation with the rights holders and finally…

INTERVIEWER: Including threatening to shut down your business last year.

Mr. CONRAD: Yeah. I mean…

INTERVIEWER: That got some price(ph).

Mr. CONRAD: Without question…

INTERVIEWER: Yeah.

Mr. CONRAD: Pandora could not have continued with the old rates.

INTERVIEWER: Right.

Mr. CONRAD: And so, happily last week, SoundExchange announced that a new license – they call it the Pureplay license, that’s the license that’s being offered exclusively to companies who basically, their exclusive business is internet radio. And the deal basically – you can think about it this way. We traded off a guaranteed minimum 25 percent of our revenues in exchange for a lower per track rate. So we’ve made the greater 25 percent of revenue or this newly adjusted lower per track rate. The rate that we had been sort of fighting about was adjusted per track rate.

INTERVIEWER: What’s a per track rate?

Mr. CONRAD: The – it kind of ramps over the years. One of the great things about this particular settlement is it’s through 2015…

INTERVIEWER: Yeah.

Mr. CONRAD: So, we won’t be dealing with this again next year. And the way I usually think about it is in the number of cents per hour that we pay, and so it’s about – it starts at about 1.2 cents and it ramps to just over 2 cents over the period versus, I think, the old rate in 2010 would have been almost 3 cents.

INTERVIEWER: And you can live with 2 cents?

Mr. CONRAD: We can.

Unidentified Man: Yeah. In 2015, it’s going to be basically what they wanted it to be. Is that right? By the time it gets up to there?

Mr. CONRAD: It’s – by 2015, it’s getting pretty close. I think it’s still – my math says it’s still that there is only 2.2 cents and 2.7 cents, so there’s still some difference.

INTERVIEWER: So, you – that happened and then you immediately close this funding around, so obviously, that was – those were tied and tied together, right?

Mr. CONRAD: You know, they weren’t so much tied together, but I do think it is…

INTERVIEWER: Did you close the funding after the settlement?

Mr. CONRAD: You know, we’re not really talking about the specifics of the funding.

INTERVIEWER: So, they weren’t really tied together except for the fact that you closed the funding five minutes after the settlement was signed.

Mr. CONRAD: Well, yeah. You know, we don’t really, we have this long history of not talking about the funding that’s going in to Pandora.

INTERVIEWER: Right. So, let’s talk about the funding. So, what are you saying? Rumors – it’s 35 million. What are you saying?

Mr. CONRAD: I can’t talk about how much we’ve raised.

INTERVIEWER: Are you saying, it’s not 35 million? Or are you just saying, I’m not commenting in anything?

Mr. CONRAD: No comment at all.

INTERVIEWER: How much did you raise before that round?

Mr. CONRAD: We’ve never talked about that.

INTERVIEWER: Oh, because it all leaked out, at least, I thought it had. We have something in our data base on it.

Mr. CONRAD: You know something, it’s not clear to me that it’s accurate.

INTERVIEWER: No, you’d be in a position to know.

Mr. CONRAD: I would.

INTERVIEWER: And David Sze from Greylock is joining you at work.

Mr. CONRAD: David Sze is from Greylock. That we’re really excited about happening. David’s great, Greylock is a fantastic investor, you know. We’re really, really happy to have David.

INTERVIEWER: So, what’s it like to have someone you really wanted and then you had David as a back-up and took him, because that’s what you said of David.

Mr. CONRAD: David was the guy all along.

(Soundbite of laughter)

INTERVIEWER: And what’s the evaluation on this 35 million dollar round?

Mr. CONRAD: Yeah, I’m also not talking about that. What started talks about that? Come on.

INTERVIEWER: How much stock do you have personally in the company? OK, I’m just kidding. I’m just kidding. You get it, the no comment route. How many users?

Mr. CONRAD: We’ve got about just over 30 million registered users, then we had about 12 million users listed last month. It’s seven or eight million iPhone installs, two million BlackBerry.

INTERVIEWER: How do you measure plays? Do you like, count number of play hours per day or song stream per day? How do you – what do those steps look like that you wanted to talk about?

Mr. CONRAD: You know, we don’t really talk about the hours dimension so much probably. I can say this though, we are easily the largest in –

INTERVIEWER: Are you willing to admit that you are an internet radio start-up?

Mr. CONRAD: Yes, we are. We are, wow!

INTERVIEWER: Will you say how many songs -

Mr. CONRAD: When we lose the light, is this over?

INTERVIEWER: It’s pretty early, yeah.

Unidentified Man: Then we get the spotlight out, right on you.

INTERVIEWER: Any other questions?

Unidentified Man: And you guys are still planning on turning a profit next year?

Mr. CONRAD: Yeah, yeah. That’s the really exciting thing about that, that’s happening is to have this royalty dispute resolved, you know. It really sets us up to have our first profitable year next year and…

INTERVIEWER: I think if we go stand right here, the light will get a little better for the very end. So, just tell me, come on. Just tell us how much you raised. I mean, the least that is, it gets the data base right on that.

Mr. CONRAD: Let’s go have a drink Mike.

INTERVIEWER: It’s enough to get you profitable? You never have to raise again? Do you think that?

Mr. CONRAD: Yeah, I think that’s true, I think that’s true. That’s the hope.

INTERVIEWER: All right. Remember, like I was there when you guys launched back in -
Mr. CONRAD: You were. I’ve got a great story about that for another day.

INTERVIEWER: Bar Camp ‘05? TechCrunch is about a day old when you guys launched.

Mr. CONRAD: It was, yeah.

INTERVIEWER: And look how far you’ve come.

Mr. CONRAD: I may have been the last entrepreneur that you chased for a story.

INTERVIEWER: I did, yeah.

Mr. CONRAD: You did.

INTERVIEWER: Oh, no. We’d still chase people for stories, yeah. Thanks, man. Thanks very much.

Mr. CONRAD: Thank you, Michael.

Author: Michael Arrington

Via: TechCrunch

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