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Pandora's Tim Westergren on the Future of the Music Biz

Tuesday, 28 Sep 2010 | 2:15 PM ET

Pandora's founder Tim Westergren has a busy schedule at Advertising Week— meeting with advertisers and speaking about Pandora's partnership with Ford .

I caught up with him in an exclusive interview, and he says that ads, the cornerstone of Pandora's business, is booming. So are Pandora's distribution partnerships — the company's streaming service will be available through Ford's new "Synch" service, and through new Tivo premiere boxes.

Westergren wants to offer Pandora everywhere that people listen to radio, which means the company's potential footprint is huge. He wouldn't name names, but it sounds like deals with automakers and companies like Tivo are pending. Pandora is making major headway into the living room: when people can access Pandora on their TVs they listen for an average 2.8 hours a day.

Westergren is very frank about how Pandora's business has done a total 180 in the past two years.

Pandora Reinventing Radio
Tim Westergren, CEO of Internet music upstart Pandora, tells CNBC's Julia Boorstin how his company is reinventing radio.

Before its iPhone app launched just over two years ago, the company was on the brink of going under. Distribution through the iPhone gave Pandora the kind of scale it needed for its ad business to really take off, and now its ad-delivery mechanisms are far more sophisticated.

It's working: Pandora has 60m users and it hit profitability in the last quarter of 2009. It paid $30 million in royalties last year — its annual revenue has been estimated at more than $50m. The majority of Pandora's revenue is from video, audio and graphic ads, but Pandora does offer an ad-free premium service for $36 a year. Westergren wouldn't break down what percentage of revenue comes from the paid service, but said that the subscription model is "very interesting."

For more on Westergren's take on the future of the music business and Pandora's turnaround, watch my full interview.

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.