Free iPhone App Pandora is making good income with advertising

After years of battling over royalty fees, internet radio station Pandora is finally moving its balance sheet into the black. Getting a boost of subscriptions from its iPhone app, Pandora is also learning that its users have a much higher tolerance for ads than it previously thought.

A beloved service with a host of financial problems stemming from record industry copyright fees, Pandora now intersperses ads into its free content and the company is finding that audiences don't seem to mind.

Pandora founder Tim Westergren spoke to Bloomberg News about the company's finances Tuesday:

"With budgets tightening in the recession, advertisers are becoming more selective about where to spend money. That benefits Pandora because it can deliver ads to targeted users, making sure commercials aren’t “wasted” on the wrong demographic group, Westergren said."

After decades of advertising interruptions on terrestrial radio, Pandora's relatively minor advertising additions are not turning people away. In fact the opposite, they are winning 50,000 to 60,000 new users per day, and Pandora expects to earn as much as $40 million this year.

[via Econsultancy]

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