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Online radio firm Pandora to handle US advertising for SoundCloud

Key Points
  • Internet radio company Pandora Media and music-sharing service SoundCloud said on Wednesday that Pandora will take over handling the U.S. advertising for SoundCloud.
  • The deal illustrates how Pandora, best known for its streaming music service, is gaining a revenue stream by selling its back-end advertising technology to others.
  • Under the deal, Pandora becomes the exclusive operator of SoundCloud's advertising business. Financial details were not disclosed.
The Pandora Media app is seen on an Apple iPhone.
Andrew Harrer | Bloomberg | Getty Images

Internet radio company Pandora Media and music-sharing service SoundCloud said on Wednesday that Pandora will take over handling the U.S. advertising for SoundCloud.

The deal illustrates how Pandora, best known for its streaming music service, is gaining a revenue stream by selling its back-end advertising technology to others. Under the deal, Pandora becomes the exclusive operator of SoundCloud's advertising business. Financial details were not disclosed.

Last month, Oakland, California-based Pandora agreed to sell itself in a $3.5 billion all-stock deal to satellite radio company and part-owner Sirius XM.

Pandora, which competes against Spotify Technology and Apple's Apple Music, has long offered free versions of its streaming music service supported by advertising.

In recent years, Pandora has been increasing its control over the back-end technology that lets advertisers place ads in front of targeted listeners, both for itself and elsewhere.

Earlier this year, Pandora bought AdsWizz, which makes such back-end systems, for $145 million. Before the deal, AdsWizz was handling advertising placements for a broad group of streaming services, including Spotify and Deezer, another rival.

Pandora has said it has the ability to place ads on about two-thirds of all digital audio inventory, making it the largest publisher of digital audio advertising in the United States.

SoundCloud is a privately held company where new, unsigned artists post and share their work. It has become central to the rap and hip hop worlds, with prominent artists like Chance the Rapper using the service early in their careers.

Collectively, Pandora and SoundCloud say their services reach 100 million listeners in the United States. Worldwide, Spotify has 83 million subscribers and Apple Music has 50 million.

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Ross Gilmore | Redferns | Getty Images
Key Points
  • Last year the music industry generated its highest revenue since 2006.
  • With the decline of physical purchases, musical artists are turning to concerts and live events to reap rewards.
  • Citi sees consolidation and integration for the music industry ahead.