Even for a company with 100 million users every three months (about 10 percent of all radio listening in the U.S., according to Westergren), Pandora's plan is not without its challenges. Shares of Pandora are still down more than 37 percent year over year.
Rival Spotify saw revenues gain 80 percent in 2015 but fail to turn a profit, Reuters reported, as musicians like Taylor Swift decried declining royalty rates. Kellogg points to Beyonce's video album as an example of the power artists will have in the future.
With everyone from Amazon to Apple now promoting music streaming services, activist investors at hedge fund Corvex have urged Pandora to consider selling the company rather than pursue what they told Reuters was a "costly and uncertain business plan." Subscriber bases simply haven't reached the proper scale, around 100 million paid subscribers, to expand profits past royalty rates, said Kellogg. Scale would let dominant players increase their monthly charges, Kellogg said.
"We made a decision to go more aggressive and expansive this year, but if we hadn't made that move, the core ad-supported radio product would have generated $60 million or so in profit," Westergren said. "That kind of sets us up really to participate in the market in a much more healthy way."