Pandora Boasts 100 Million Users; Redesign Incoming

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Free Internet radio is a hit, and Pandora has proof.

Pandora now has 100 million users, 36 million of whom log in to the streaming music service every month. Pandora also announced that it accounts for 3.6 percent of the entire radio market, compared to 2.3 percent at the end of last year.

(MORE: Everything You Need to Know About Pandora’s Initial Public Offering)

But the soaring numbers aren’t all good news. Pandora, which went public last month, has never turned an annual profit, and the more listeners it gets, the more royalties it has to pay. Pandora offers a $36 per year premium service and requires 99 cents from non-paying users who want to exceed 40 hours of listening per month, but the company isn’t saying how many of its 100 million users pay.

My guess is not many. Earlier this week, streaming music service Rhapsody revealed that it has 800,000 users after 10 years in business. These are very different services — Rhapsody provides on-demand music for $10 per month while Pandora users may not choose specific songs no matter what they pay — but the difference in users highlights the difficulties in getting people to pay for streaming music.

That hardly means Pandora is doomed. As its user base grows, Pandora becomes harder for the music industry to ignore as a revenue source, which may lead to more favorable terms in the future. No one wins if a service with 100 million users goes down the drain, so it’s in Pandora’s interest to build its user base and increase retention.

To that end, Pandora is now rolling out a revamped website, based on HTML5, with faster response times and an increased emphasis on social features. I haven’t used it yet–it’s hitting Pandora One subscribers first, followed by everyone else in the coming weeks–but apparently it’s quite nice. A redesigned Pandora website probably won’t lead to an explosion in new members, but it may help convince some of those 64 million inactive users to stick around.

LIST: Pandora Among 50 Best iPhone Apps of 2011

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