Instead, as you wait for "Hear 2.0" and "Inside Music And Media" blogs to load on your other browser tabs, I'd like to humbly direct you to Jim Edwards' blog (Pandora’s Business Model Looks Like a Suicide Pact).
Pandora is locked into a Catch-22: The more users it has, the more advertising it can sell against those pairs of ears. But at the same time, the more ears that are listening and the longer they listen, the more songs they hear and the more Pandora must pay out in music license fees. The company seems to realize that its business model, for the next 18 months at least, is a mutual suicide pact between its music costs and its revenues:
Content acquisition expenses increased $16.5 million due to increased royalty payments driven by increased listener hours and by higher revenue.
While we had net income in the fourth quarter of fiscal 2010 and the second and third quarter of fiscal 2011, we expect to incur losses on an annual basis through at least the end of fiscal 2012.
Meanwhile, good ole fashioned local radio reaches more than nine of ten Americans every week and has solid profits on a station by station basis in all market sizes.
Someone may get rich owning Pandora in the near future (can you spell LinkedIn?), but the company's viability in the short or even medium term remains a question mark.
"Scale" can be a good thing ... as long as you're not scaling an immense wall of growing debt, and your operating costs aren't accelerating faster than your revenues.