Click here for part one of this story, chronicling Pandora’s rise.

When Oakland-based music service Pandora marked its tenth anniversary in September 2015, it had plenty to celebrate. The company was on track to surpass $1 billion in annual revenue for the first time and was drawing 81 million monthly listeners. In its first decade, Pandora users had created eight billion stations, logged 74 billion hours of listening, and rated 55 billion songs with its signature thumbs up and down buttons.

But the momentum was already fading. Pandora’s audience had peaked the year before, and growth had stalled as listeners shifted to Spotify. Apple Music, launched that June, only heightened the competition. Pandora scrambled to adapt, acquiring a data company, a ticketing business, and a bankrupt Spotify rival.

None of it worked. The business kept slipping . . .

SiriusXM acquired Pandora three years later. Since then, the picture has darkened further: the service has lost about 26 million monthly users, and a planned relaunch was abandoned before the new app ever launched.

“It’s very sad,” says a former SiriusXM employee. “It’s a missed opportunity.”

A former Pandora employee who left after the acquisition is even more blunt: “It was a disaster.”

This two-part history of Pandora draws on numerous interviews with former employees and executives, many of whom were granted anonymity to speak candidly—either out of fear of retaliation or because their current employers bar them from speaking to the media.

Grasping at a straw

Pandora launched in 2005 with a personalized radio model built for lean-back listening. By 2015, that approach was losing favor, especially among younger audiences drawn to Spotify’s on-demand service. Still, Pandora executives hesitated to challenge Spotify directly, worried about alienating their existing users.

Instead, they looked to diversify revenue. In May 2015, Pandora acquired New York–based music data startup Next Big Sound. Five months later, it spent $450 million on online ticketing marketplace Ticketfly. The bet was that Pandora’s vast audience, paired with its insights into listening habits, could empower artists with data and ticketing tools—and give Pandora new ways to monetize streaming.

But the synergies never materialized. A few large corporations dominated ticketing, leaving little room for Ticketfly. A year after the deal, Ticketfly accounted for just 6% of Pandora’s revenue.

The acquisition “served to be a big distraction,” says one early Pandora employee who has since left the company. Another puts it more bluntly: “It was probably the business-killing mistake.” In 2017, Pandora sold Ticketfly for $200 million—effectively a $250 million loss.

The distraction cost Pandora more than money. While it chased new revenue streams, Spotify surged ahead. By 2017, Spotify generated $4 billion in revenue and boasted 159 million users, including 71 million subscribers.

Pandora, meanwhile, fell below 75 million users that year. When ad revenue also came in weak, its stock tanked, and employees realized the company was in serious trouble. As another former employee puts it: “It was like: whoa, what happened?”

A last stand against Spotify

In late 2015, Pandora finally decided to take on Spotify head-on by acquiring Rdio, a Spotify competitor that had been a favorite of design-obsessed trendsetters. However, the acquisition came with some strings attached: Rdio had run out of money and accumulated significant debt. 

Pandora bought some of Rdio’s assets out of bankruptcy and hired much of its staff, but the service itself was shut down almost immediately—long before Pandora could offer users a replacement.

The handoff was messy. “Some people from Rdio felt like: I joined Pandora to rebuild the thing that I already built,” recalls a former Pandora staffer. Rebuilding Rdio from scratch and weaving it into Pandora took time, and by the time the company launched its Spotify-like on-demand service in early 2017, most of Rdio’s fans had already moved on to Spotify or Apple Music.

“By the time we launched it, we lost momentum,” the former staffer says.

The push into true on-demand streaming also drained Pandora financially. With its share price sagging, the company couldn’t raise funds from the public markets. In summer 2017, SiriusXM stepped in with a $480 million investment, acquiring 30% of Pandora.

SiriusXM and Pandora: an odd couple

SiriusXM didn’t remain a minority investor for long. In summer 2018, it announced plans to acquire the remaining 70% of Pandora for $3.5 billion.

From the start, the two companies were a cultural mismatch. SiriusXM was an old-school East Coast media giant with conservative leadership, while Pandora, even in liberal Silicon Valley, stood out for its progressive culture.

“[Pandora was] as left wing as you can get as a company,” says a former employee. Another employee adds that “Pandora was full of dudes with dreadlocks and queer girls with face piercings. Sirius had no idea what to do with that.”

Still, SiriusXM gave Pandora a chance, seeing it as a way to fight off a common foe: ever-better mobile connectivity and the growing popularity of podcasts and on-demand streaming all were seen as a threat to SiriusXM’s business model. SiriusXM’s own subscriber growth peaked in 2019, and streaming looked like the best way to fill the gap.

In other words: Just like Pandora, SiriusXM had Spotify envy.

That’s why, at least initially, Pandora was embraced as a change engine. Its team was put in charge of SiriusXM’s product development and tasked not only with integrating Pandora but also with reinventing SiriusXM for a post-car future. “It felt like a reverse acquisition,” recalls a former Pandora employee.

Pandora X: The big relaunch that never happened

Soon after the acquisition, the Pandora-led joint product team began work on an ambitious project called Pandora X. “They were going to completely reimagine the Pandora app,” says a former Pandora employee. “It was going to be a new kind of product. The future of Pandora was Pandora X.”

“It was the big bet,” says a former SiriusXM employee. “The new app was going to save the trajectory of the business.”

The company poured significant resources into development, creating multiple internal versions under code names like Bluesky and Greenfield. But the vision kept shifting. At first Pandora X was just a revamped Pandora app; then it was supposed to represent the future of SiriusXM itself.

“Pandora X  burned [tons] of resources, [tons] of money,” says the former Pandora employee, adding that there was “[a lot] of hand-wringing and hairpulling because they couldn’t figure it out.”

“The strategy direction kept changing,” agrees the former SiriusXM employee.

The endless back-and-forth produced an app no one was satisfied with, including consumers who saw it in an early beta. “There was no competitive advantage, there was no differentiation,” says the former SiriusXM employee. “It was just another attempt to be Spotify.”

In the end, SiriusXM scrapped Pandora X altogether. “It never shipped,” says a second SiriusXM employee.

Meanwhile, Pandora’s weak financials fueled tensions. Employees recall being berated on Zoom calls for underperforming. “There was a lot of Pandora bashing internally,” says the former SiriusXM employee, noting the perception among SiriusXM leaders that the streaming unit was “wasting money.”

Somehow, Pandora is still rocking

But somehow, despite losing nearly half its audience, Pandora is generating more revenue than ever, to the tune of nearly $2.2 billion in 2024.. That’s thanks largely to its advertising business, which since 2018 has also included selling ads for third-party platforms like SoundCloud.

Still, margins in streaming ads remain roughly half of what SiriusXM earns from its legacy subscription business. That gap explains why SiriusXM has steadily shifted focus back to satellite radio. According to two former employees, executives tried several times to sell Pandora but couldn’t find a buyer. Instead, Pandora has lingered in what one describes as “maintenance mode.”

As the former SiriusXM employee puts it: “They’re keeping the lights on rather than investing in it.”

A spokesperson for SiriusXM said Pandora remains a major force in ad-supported streaming, valued by both listeners and artists for the radio-style experience it helped pioneer. “Pandora continues to be the audio platform of choice for tens of millions of listeners each month, who remain dedicated fans of the service,” the spokesperson added. “And for musicians, Pandora plays an important role, helping them build their careers and reach new audiences.”

The spokesperson also noted that Pandora’s role extends beyond its app, with its adtech and sales operations now part of SiriusXM Media. That unit has become a leading cross-brand advertising business, reaching 160 million people monthly across SiriusXM, Pandora, SoundCloud, and the country’s top podcast network for adults 18 and older.

Seven years after the acquisition, integration between the two platforms is minimal. Pandora users can stream select SiriusXM programming, SiriusXM subscribers can build Pandora-style stations inside the SiriusXM app, and one Pandora-branded channel broadcasts on SiriusXM. To mark Pandora’s 20th anniversary, SiriusXM plans to release a special playlist featuring some of the service’s highest-rated songs.

Ask former Pandora employees why the company couldn’t keep up with Spotify, and you’ll hear different answers. Some argue Pandora should have launched an on-demand product sooner. Others believe it should have doubled down on personalized radio and ignored Spotify’s model altogether.

“We screwed up,” says a former Pandora employee who is in the latter camp. “We had a chance to have a great business. It wouldn’t have been the highest stock price, [but] a very unique, durable company in the music space.”

Then again, Pandora is still playing, and many millions are still listening—including founding CEO Joe Kennedy, who actively uses the service to this day. “It is pretty wild that Pandora is still around after two decades,” Kennedy says, adding that countless other music startups weren’t as lucky. For him, the enduring power of the service lies in Pandora’s ability to find the needle in the haystack, and deliver just the right mix of music to its listeners, song after song.

“That it’s still doing that for 40 to 50 million people a month is pretty damn cool,” Kennedy says.