My Correspondence with Tim Westergren, Pandora Founder

In light of Pandora's recent I.P.O., I thought I'd publish my July 2009 email correspondence with founder Tim Westergren; a short exchange that started with the following bulk email he sent out to his users:

Hi, it's Tim-

I hope this email finds you enjoying a great summer Pandora soundtrack.

I’m writing with some important news. Please forgive the lengthy email; it requires some explaining.

First, I want to let you know that we’ve reached a resolution to the calamitous Internet radio royalty ruling of 2007. After more than two precarious years, we are finally on safe ground with a long-term agreement for survivable royalty rates – thanks to the extraordinary efforts of our listeners who voiced an absolute avalanche of support for us on Capitol Hill. We are deeply thankful.

While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone. Most listeners will never hit this cap, but it seems that you might.

We hate the idea of capping anyone's usage, so we've been working to devise an alternative for listeners like you. We've come up with two solutions and we hope that one of them will work for you:

• Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay just $0.99 for unlimited listening for the rest of that month. This isn't a subscription. You can pay by credit card and your card will be charged for just that one month. You'll be able to keep listening as much as you'd like for the remainder of the month. We hope this is relatively painless and affordable - the same price as a single song download.
  

• Your second option is to upgrade to our premium version called Pandora One. Pandora One costs $36 per year. In addition to unlimited monthly listening and no advertising, Pandora One offers very high quality 192 Kbps streams, an elegant desktop application that eliminates the need for a browser, personalized skins for the Pandora player, and a number of other features: http://www.pandora.com/pandora_one.
  

If neither of these options works for you, I hope you'll keep listening to the free version - 40 hours each month will go a long way, especially if you're really careful about hitting pause when you’re not listening. We’ll be sure to let you know if you start getting close to the limit, and we’ve created a counter you can access to see how many hours you’ve already used each month.

We’ll be implementing this change starting this month (July), I’d welcome your feedback and suggestions. The combination of our usage patterns and the "per song per listener" royalty cost creates a financial reality that we can't ignore...but we very much want you to continue listening for years to come.

Please don't hesitate to email me back with your thoughts.

Sincerely,

Tim Founder

I had a few issues with this email. Because I had never met 'Tim', I didn't like that he addressed me as if I knew him personally, which I felt (and feel) is an abuse of basic human manners and decency in the interests of making money. Don't make me feel like your friend in order to ask me for cash. Don't show images of intimate family life with moving music and then have the good-natured father character turn to the camera and say, 'Shouldn't you be insured with us?' Don't force employees to blatantly fake their emotions in the course their work; there is genuine service and then there is that psuedo-service stuff that is painful for everyone involved. In sociology they call this 'The Commodification of Affect' which can range from a cashier telling you to 'Have a Nice Day' (my sociology professor used to jokingly reply, 'Thanks, but I have other plans.' - I think I was one of the few in the class that found that funny) to a complete stranger extending his hand only to reveal his effort at solicitation, to a waiter forcing a smile, etc.

This is not trivial; it belies much deeper and more fundamental concerns regarding the permanent effect of commodification on our emotional and personal lives. After a certain point we unconsciously accept and embody much of this fake shite - shite has no bearing on true emotional expression and resonance.

There is an excellent (well, very dull, academic, and soporific) book on this subject: "The Managed Heart: Commercialization of Human Feeling" by Arlie Russell Hochschild.

Anyhow in light of these sensitivities of mine I sent poor Tim a mean email:

Tim -

The subscription model isn't going to cut it for your nascent service; while appealing on some fronts (unique music delivery, discovery of new music), it is problematic enough on others (redundant song selection, intrusiveness) that I'm not ready to pay for it. In other words, in the event this new "cap" effects my experience, I'm just not that attached to pandora to do anything but leave. It already asks me if I'm "still listening" far too often.

Alarm bells should go off anytime you are compelled to write a lengthy letter to a consumer. I don't know you on a first name basis, nor you I, so don't pretend that you do - it's evil. To commodify affect is wrong; don't fool yourself into doing it. A friendly message asking me to pay for something is one I learned long ago to ignore. The proof of your consumer sincerity is in the user's experience - nowhere else - and you are already sliding down a slippery slope.

If you cannot make money off of advertising, then you have a problem, as yours is already too invasive. Constantly apologizing for it only makes it worse.

Whether you like my blunt message or not, in me you have an ideal
early adopter. Yours is the type of service, if executed properly, that I would and have told others about. So why penalize what should be the segment of your consumer base you value most?

Good luck,
J.T. Storey

To my complete shock Tim himself actually responded. This I rather liked; here's what he had to say:

Hi Jeff -

Thanks a lot for taking the time to write such a lengthy and thoughtful reply. These really mean a lot to us – even if it’s something we don’t enjoy hearing!

Blunt is just fine.

Regarding the points you make, let me take a shot at responding:

Subscription is not something we expect more than a small percentage of listeners to choose. We know people rarely pay for such things. What we’re really saying is we can only afford 40 hours per month free per listener – that reflects the reality of advertising revenue.

You certainly make a worthy point on the mass ‘personal’ email. But I’m not sure what is a better alternative. We mean every word, and feel it’s important to provide an explanation to listeners who want to know why things have changed. Also, if anyone replies, we answer EVERY note personally and directly, like this.

In terms of making money off of advertising, if you feel our advertising is already too invasive, then I think subscription is the right answer for you. Services have to make money somehow, and the federally-mandated royalties are very high. That leaves advertising – and advertisers want to be noticed. If they’re not, they won’t pay for the placement. We try to be as elegant as we can, and I feel we strike a reasonable balance.

I welcome your advice on what we should do instead.

Thoughts?

T.

Here's my reply:

Tim,

I truly appreciate your personal reply - on that front you have
completely won me over and culminated a certain degree of loyalty,
therefore it was well worth your effort.

If i can offer any - perhaps less blunt - value in return, I'll tell you my thoughts solely from a consumer point of view, which I know you probably welcome. The last thing you need is a sycophant.

I am the type of consumer for whom everything on the web is still
"free". I don't pay for any service, and if one wants to charge me, I will find an alternative until one no longer exists (which hasn't happened yet). So that's out. I'm willing to bet I'm not alone and that your income from subscriptions is nominal.

By capping me you're actually encouraging me to find that alternative. So this week, for instance, I started listening to last.fm, something I'd never bothered to do before. Thus in effect you're chasing away an "early adopter" at the most critical time in the game. In five years the number of consumers using these kinds of services will be exponentially larger, so my suggestion is simply to hold on to what you have and do everything you can to grow your audience. Reward your heavy users, don't penalize them. The short term monetary gain pales in comparison to the long term benefit of a "word of mouth" consumer like myself. I spread the word, which has tangible value.

As far as advertising, I might ask if your site is really set up to fully utilize advertising potential. The layout seems an afterthought. Is it necessary for pandora to be flash-based? To what end do things need to glide and move? (For example, if I dislike a song, up glides a window that I then have to close, which says only that it won't play the song any more. That sort of thing could be designed more elegantly.) These things use up valuable real estate that could be making you more money.

Bottom line: "intelligent" radio is a revolution in music listening that will quickly become ubiquitous. Pandora is right on the crest of that wave. The rewards of preserving long-term vision are right around the corner. It will pay off to stick diligently to the principles that got you here: preserving the consumer experience.

Thanks again for your reply, much appreciated
- J.T. Storey

A bit more; he actually replied back to this:

Thanks, Jeff. Really appreciate all the thought you put into this.

Alas, I agree with a lot of what you’re saying – and know that this impact is not going to be a good one. But I still don’t see an alternative.

Believe me, we’re doing everything we can to get the monetization engine running. It’s just a bloody expensive service to run !

I also think companies like ours need to be careful about competing with free. Eventually, anyone wanting to offer something like this either has to cope with the same economic realities as us, or become illegal. It hurts to get negative feedback, but I don’t know there’s another way.

Cheers. T.

My last reply:

Thanks Tim. Rooting for you and will continue to spread the word. Best of luck and hope my feedback helped.
- J.T. Storey

In this last bit I'm afraid I was still a bit caught up in the novelty of receiving an actual reply. Because of the Pandora subscription fee I did indeed switch over to last.fm (vastly superior). To further illustrate my fickle nature, in the last few months I have moved from last.fm to grooveshark.com, which actually allows you to type in any song and create a library that you can play in any order, giving me no reason to ever purchase a song again (not sure what the purpose is of the iCloud, for instance, when with grooveshark you can listen to any song on demand. Then again, not sure how grooveshark is even legal, but I digress).

My latest foray is Spotify, which has a litany of annoyances - foremost the ads (which bear no resemblance to the type of music I'm listening to, an epic 'music genome project' failure). If advertising is so important, why not advertise intelligently? Effectively? If I am listening to Debussy, I don't want to hear a Lady Gaga ad!!!! Their radio sucks too, but I digress again (the only two radios are last.fm and pandora, and last.fm is winning that battle by a long shot).

Having exposed myself to all these services, my initial criticism of Pandora stands firm: their catalog is too limited (a 'radio station' quickly starts playing repeats), their algorithm is limited (experts should group and link genres/songs, not similarities in sound waves; this generally has a ways to go), and their interface is very poor (go away flash!). UPDATE: Interface is changed for the better! But radio station loop identical to a year ago - same bloody songs!!!

Anyhow all this aside, I did appreciate my latest update from Pandora. It wasn't personal, but it was validating: