Pandora is the leader in Internet radio.  They worked away in obscurity for many years.  Their early entrance combined with their  unique (many have copied now) approach to generating a customized listener playlist, gradually built a significant audience.  With listener registration data they have reached a scale where they can now geo target and sell local advertising in many markets.  Their recent deal with AdReady on the display front and positioning this as an ad opportunity for SMB’s is just one step in maximizing their advertising opportunities.  They have created music genres and I would not be surprised to see them expand to offer other types of content, news, weather, sports, etc although this gets them away from their music (genome) roots and this type of content creation would be more expensive.

Arbitron states that Sirius XM has 32 million weekly listeners.  Quantcast states Pandora reaches 8.4 million people on a weekly basis.  While Pandora’s audience is roughly one quarter of Sirius XM, Pandora is growing rapidly (Pandora audience increased 104% from 9/09 t0 6/10.  With Pandora pushing hard for in-car placement we believe Pandora will overtake Sirius XM’s audience within three years.  It blows one’s mind to think about the billions of dollars invested in Sirius XM to create their audience compared with the $100 MM (just a guess) that Pandora has raised to date.  Public offering for Pandora within one year is my bet.