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Pandora’s largest investor is so concerned about its future that it sent a letter to the company’s CEO and board members asking them to reconsider its strategy and explore the possibility of a sale. According to a report in Music Business Worldwide, Corvex Management LP, the investor that sent the letter, owns 8.3% of Pandora and is fed up with seeing the company’s share price slide.
Among the concerns expressed in the letter include:
Pandora is reportedly gearing up to transition to an on-demand service like Spotify, since in its current non-interactive state the company is not able to expand to other territories. It’s now available only in the United States, Australia and New Zealand, but other countries have blocked entry because of local rights issues which have proved too costly for the company to overcome. Turning into an on-demand streaming service would allow Pandora to expand, since most of the required record label licenses would be world-wide and wouldn’t depend upon local broadcast regulations.
Pandora labels itself as “Internet Radio,” a term which, while accurate, is very limiting. In September of 2015 the company purchased many of the assets of the Rdio music streaming service out of bankruptcy, providing it with much of the infrastructure for the change in the platform. The licenses from the major labels (the difficult part) were not included, however.
The call for a sale by its largest investor may cause others to jump on board, which could mean a fire-sale for the company, and one more income source for artists will die.