Pandora To Lay Off 5 Percent of Staff

Pandora Media Inc. will cut 5 percent of its workforce and take other measures to save costs, as it battles intense competition in the online music streaming market.

The company announced that it is laying off about five percent of its employee base as it switches to new services automating some of its advertising and marketing, investing in more non-music content, and with “other cost-saving measures”, with a goal of saving $45 million annually.

"The redesign shifts resources to focus on ad-tech and audience development efforts...," it said in a statement. The company currently has 2,488 employees.

Pandora said it would shift focus towards ad-tech, hinting at a move away from the subscription streaming business, where it competes with Spotify. Pandora has nearly 80 million free users and about 5 million paying subscribers -- compared to Spotify's 70 million paying customers. Advertising makes up the bulk of the company's revenues.

“As I shared last quarter, we know where and how to invest in order to grow,” Pandora CEO Roger Lynch said in a press release. “We have an aggressive plan in place that includes strategic investments in our priorities: ad-tech, product, content, partnerships and marketing. I am confident these changes will enable us to drive revenue and listener growth.”

Pandora also said it would shift some operations from its Oakland headquarters to Atlanta, which is cheaper and has been a growing force in hip-hop, the leading genre in the music business in recent years. 

The online music streaming industry has become a battleground for market share, with companies such as Apple and Alphabet's Google bolstering their services to attract new users.

Pandora, similar to other music streaming companies like Soundcloud and Tidal, has struggled to lure people to pay for their services in the face of mounting competition from Spotify and Apple. 

Pandora said it expected a lower percentage of revenue in full-year 2018, hurt by operating expenses required for cost cuts.

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