Good article from the WSJ
Pandora Files for IPO, But Can It Ever Make Money?
Pandora mostly has been unprofitable.
That’s not totally a surprise, of course. The music royalty fees long have been a question mark about Pandora’s business. Heck, even Apple can’t make real money from iTunes. Pandora fought hard several years ago to rework the music industry’s royalty fee structure. But now we know just how much those royalties are denting Pandora. On a percentage basis, those costs are down from about 80% of revenue in the fiscal year ended Jan. 31, 2009. But still: How sustainable is Pandora’s business if it has to pay out half or more of its revenue just for the rights to music?
Pandora doesn’t expect the problem to abate soon. The company said it expects its revenue growth rate will slow, because of competition and the “maturation of our business.” And here’s what the company said in its IPO filing about its profits (or lack thereof)