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Business Operations Business Models

How Does Pandora Make Money (Business and Revenue Model)

The Pandora business model

How Does Pandora Make Money?
Here’s what you should know:
  • What is Pandora, and how does Pandora work?
  • How does Pandora make money?
  • Subscriber Revenue
  • Advertising Revenue
  • Pandora’s Subsidiaries, Acquisitions, and Exits
  • Pandora’s profit and revenue
  • What is the Pandora business and revenue model?
  • Pandora’s funding and valuation

How does Pandora make money? Here is a full, in-depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Pandora business model, their year-over-year revenue, and how Pandora works.

What is Pandora, and how does Pandora work?

Pandora, a subsidiary of Sirius XM, is a music streaming service that enables users to listen to songs, albums, playlists, and podcasts on its platform.

How Pandora works is: Users have the option to sign up for a free or paid subscription account. Free accounts are limited, while paid user accounts can enjoy ad-free listening, offline listening, the ability to create and share playlists, and more.

Founded in 2000 by Will GlaserJon Kraft, and Tim Westergren, Pandora later went on to become acquired by SiriusXM on September 24, 2018, for $3.5 billion. Since then, Pandora has more than 55.1 million monthly active users and approximately 6.5 million paying subscribers.

Some of Pandora’s competitors include Spotify, SoundCloud, Apple Music, TIDAL, and other music streaming services.

Pandora App in Apple App Store | Pandora Business Model | How Does Pandora Make Money?
Source: Apple App Store

How does Pandora make money?

According to SiriusXM’s 2021 Q2 Press Release, Pandora has more than 55.1 million Monthly Active Users (MAUs) and approximately 6.5 million paying subscribers. So how does Pandora make money off of all these users and subscribers?

Below is a breakdown of how much money Pandora makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Pandora makes money (in 2021):

Pandora has a revenue model that makes money in two (2) ways – subscriptions and advertising.

#1. Subscriber Revenue

Pandora makes money through its subscription plans. And according to SiriusXM’s 2020 Q4 Press Release, Pandora’s subscriber revenue brough in $515 million in 2020.

The service offers three (3) subscription tiers: Pandora, Pandora Plus, and Pandora Premium. Subscription costs vary based on the tier and each tier comes with its own set of perks such as ad-free listening, offline listening, the ability to create and share playlists, and more.

As of June 30, 2021, Pandora has approximately 6.5 million paying subscribers.

Pandora Subscription Cost:

  • Pandora: free
  • Plus: $4.99 per month
  • Premium: $9.99 per month

Note: $515 million or 30.2% of Pandora’s total revenue of $1.69 billion was generated through subscriber revenue in 2020.

#2. Advertising Revenue

Pandora also makes money through its advertising business model. In fact, $1.18 billion or 69.8% of Pandora’s total revenue was generated through ad revenue in 2020.

The way it works is: Pandora sells advertising placements, which are sold under the SXM Media brand, on their Pandora ad-supported radio service, audio platforms, and podcasts.

These ads were heard in, according to SiriusXM’s 2020 Q4 Press Release, 12.5 billion ad-supported listener hours throughout 2020.

Note: 69.8% of Pandora’s total revenue of $1.69 billion was generated through ad revenue in 2020.

Pandora’s Subsidiaries, Acquisitions, and Exits

Aside from Pandora being acquired by SiriusXM for $3.5 billion, Pandora has also made a total of 5 acquisitions of its own, to date.

Pandora Acquisitions
Source: Crunchbase

Pandora’s profit and revenue

In 2020, Pandora reported $1.69 billion in revenue.

Note: Because Sirius XM Holdings Inc., the parent company of Pandora, is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Sirius XM’s publicly released financial reports, including annual reports, through Sirius XM’s investor section on their website.

What is the Pandora business and revenue model?

Pandora makes money through a few revenue models that they combine within their company, they are:

  • Freemium (upselling) business model
  • Subscription business model
  • Advertising business model
  • B2B2C (partnerships) business model
  • Mergers & acquisitions (M&A) business model

Pandora’s funding and valuation

According to Pandora’s Crunchbase profile, Pandora has raised $750.3 million over 11 rounds.

Pandora was acquired by SiriusXM for $3.5 billion on September 24, 2018.