At year’s end while other online music services appear to be in a state of tumult with acquisition or dwindling revenues (as well as uncertainty in Spotify’s case), Pandora appears to be doing very strongly in the US. After potentially compromising struggles with funding and licensing rates, the personalized online radio service has reported a stellar end of the year with 40 million registered users.

This figure is double the amount of users from last year, and the site also has a high rate of return with 15 million people visiting the site each month, chief executive Tim Westergren. In comparison to other streaming sites, Clear Channel Radio reports about 8 million listeners a month, CBS about 9 million, and Last.fm has 13 million US visitors a month. On top of that, TechCrunch suggests that Pandora now accounts for 44% of all internet radio listening hours in the US.

More interesting news from the company came earlier in the month at the SF Music Tech Summit, CTO Tom Conrad revealed that Pandora is in talks with auto companies to work on a plan to offer free, in-car streaming…even going as far as to suggest it being integrated into the vehicle’s entertainment system with the subscription price already included in the cost of the vehicle.

While the first reports are due in January, the premise should be extremely enticing to the music industry. If Pandora were to fully integrate their stations into ‘traditional’ outlets, they certainly have the potential to take a sizable chunk from the estimated 234 million traditional radio listeners left, only increasing the value of its advertising.

A recent Wall Street Journal article pointed out the disappointment of traditional radio’s online ad revenues, as most stations only lure between 3-5% of its listeners online. Ads on Pandora on the other hand, especially being few and far between, can demand higher prices. The article also reports “buying spots on Pandora cost 20% more than buying regular over-the-airwaves radio spots in the city [Los Angeles], one of the most expensive ad markets in the U.S”.

Another reason Pandora has the ability to charge more, according to Hypebot, “recent comScore data show that Pandora’s delivery of coveted ad targets beat out both Hulu and ESPN with nearly twice as many daily visits among 18-24 year-olds. Among 25-34 year-olds, visitors come back to Pandora more than twice as often as repeat visitors to CNN”.

And how are the advertisers reacting to their purchases? Here’s a quote from one very satisfied customer, Drew McGowan from Brita, “While Pandora is getting bigger, it’s also getting better — enabling brands such as Brita and our Filter For Good campaign not only to reach consumers, but to finely target our messaging to specific age groups, gender, geography and more — all wrapped in a premier user experience that’s truly engaging”.

It’s baffling how little the industry has been getting involved with Pandora and is instead quibbling over things like how to launch Spotify. It’s like, how much more proof does the industry need? How about, earlier in the year there were reports that 20% of the 1 million tracks a month being purchased on Pandora was from the iPhone app, and even before the site served as top affiliate purchase drivers for Amazon and iTunes. Also, recently the site has even placed noticeable buy links in the main window for each track, increasing the potential for purchases.

Another extremely attractive aspect of Pandora is its mobile reach and draw. Half of the 600,000 new weekly users are coming from mobile and about one-third of its 3 million daily users listen through mobile phones. Another strong number is 10 million, the number of Pandora iPhone app users which has grown 400% this year.

Pandora’s musical genome abilities have given the service an edge over services like Rhapsody and Last.fm and people have reacted well to it. The company has also been integral in bringing in more traditional audiences and helping to monetize them. In an interview with Music Ally, We7 founder Steve Purdham noted it’s and Pandora’s benefit for the industry that they bring in “millions of legal users that the music industry didn’t have before…they’ve come from environments where the music industry didn’t get any money out of them before”.

With 25% of Pandora’s revenues going to royalties and reports of Westergren expecting full-year revenue of about $40 million, as well as its potential of reinventing radio, labels can’t afford to ignore Pandora for much longer.

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