Image via Flickr/ jdlasica

Managing costs continues to be a concern for popular music-streaming firm Pandora Media, but the company appears to be offsetting increased royalty fees with advertising sales, according to its fourth-quarter earnings report released Thursday. Not only was revenue from mobile ads up, but the overall loss of $14.6 million—just 9 cents per share—was less than analysts expected and an improvement over the $8.2 million loss one year ago.

Not only did the company release its fourth-quarter numbers, but CEO Joseph Kennedy announced his resignation.

As part of our board discussions of the road that lies ahead, I reached the conclusion and advised the board that the time is right to begin a process to identify my successor,” Kennedy said. “My heart is still 100% in Pandora. But as I approach the start of my tenth year, my head is telling me. It is time to get to a recharging station sooner rather than later.”

As soon as a successor is found, Kennedy will step down from the position he has held since July 2004. The announcement, as well as the better-than-expected earnings, were apparently welcome news to investors, as shares of the Internet radio pioneer shot up more than 20 percent—a $2.42 increase—to $14.15 in after-hours trading. Pandora stock had been below $14 for more than a year.

Recently, concerns over Pandora’s ability to sell ads on mobile devices had been high, especially when the company said it would begin capping the amount of time listeners could stream free music on mobile devices at 40 hours per month. The change suggested difficulty in managing the rising costs of royalties, which rise every time a user plays a song. According to Pandora, fourth-quarter listener hours increased 53 percent over a year ago to more than 4 billion.

Is a cap really so bad, though? People tend to get rather greedy when it comes to Internet services and forget that everything costs money. Pandora isn’t a not-for-profit, and if ad revenues aren’t cutting it, a cap is absolutely justified. If someone wants more free music, let them pay the nominal fee Pandora charges for its premium, ad-free service. After all, nothing is ever truly free.

Samantha Lile

Samantha Lile is a 2002 Missouri State University graduate of journalism and mass media. She has served as a reporter and editor for various newspapers throughout her journalism career. She made the leap into writing full-time after working for a major financial institution since 2000.

Because of her banking background, Samantha is knowledgeable in finance reporting, but is also strong in commentaries, personal profiles, youth studies, horticulture, history and entertainment-related works.

Samantha lives in Ozark, Mo. with her husband of nine years, four dogs and two cats.

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