Pandora Lays Off 20 Employees

Sam Gustin writes: Congress may have recently thrown Pandora a lifeline, but that doesn't mean the popular Web radio service is exempt from the dismal economic climate.

Company founder Tim Westergren announced 20 layoffs last night, bringing the company's workforce down to 120.

"This is a very sad day for Pandora, and for me personally," Westergen wrote. "Today we reduced our staff from 140 to 120 employees. Like virtually every company, Pandora is not immune to the challenges presented by the current economic turmoil. We are trying to react quickly and responsibly to the new environment."

Despite the bad news, Westergren tried to find an upside:

"There are tough times ahead for the economy, but our listenership is growing rapidly, the Internet radio royalty rate resolution seems finally near, and the explosion of mobile devices like the iPhone are opening up a world of opportunity for internet radio to expand off the desktop," he wrote. "Moreover, our ad sales are growing so well that, not only did we not make any reductions there, we need to continue to hire more."

"It's just hard to be excited about all that today."

Last month Congress passed the Webcaster Settlement Act, which gives Web radio outfits like Pandora more time to negotiate royalty rates with Sound Exchange, the group that represents the recording industry. In August, Westergen warned that Pandora was drowning under the weight of the fees it must pay the record labels for use of their songs.

The two sides have until February 15, 2009, to hammer out a deal. □