Pandora 2016 Annual Report Download - page 22

and standalone, automated ticketing systems that enable venues to perform their own ticketing services or utilize self-ticketing
systems. We also experience competition from other national, regional and local primary ticketing service providers to secure
contracts with new promoters and venues. Our main competitors for clients include primary ticketing companies such as Live
Nation Entertainment's Ticketmaster division, Tickets.com, AXS and Paciolan and upstart providers such as Eventbrite and
eTix.
Although we believe that our products and services currently compete favorably with respect to such factors, we cannot
provide any assurance that we can maintain our competitive position against current and potential competitors, especially those
with greater brand recognition, or financial, technical or other resources.
Competition for Fans
We compete with other live events technology and primary ticketing companies, as well as secondary ticketing
companies for ticket sales to fans. We compete on the basis of a number of factors, including our ability to reach fans and
provide enhanced fan experiences. The ticketing services industry includes the sale of tickets primarily through online
channels, but also through telephone, mobile devices and ticket outlets. In the online environment, we compete with other
websites, live events technology and ticketing companies to provide event information, sell tickets and provide other online
services. We experience competition from other national, regional and local primary ticketing service providers to reach fans
for events. Resale, or secondary, ticketing services have created more aggressive buying of primary tickets whereby brokers are
using automated internet “bot” technology to attempt to bypass queues and buy tickets when they go on sale. Our main
competitors for fans include primary ticketing companies such as Live Nation Entertainment's Ticketmaster division,
Tickets.com, AXS and Paciolan, upstart providers such as Eventbrite and eTix and secondary ticketing companies such as
StubHub.
Seasonality
Our results reflect the effects of seasonal trends in listener and advertising behavior. We expect to experience both higher
advertising sales due to greater advertiser demand during the holiday season and increased usage due to the popularity of
holiday music during the last three months of each calendar year. In addition, we expect to experience lower advertising sales
in the first three months of each calendar year due to reduced advertiser demand and increased usage due to increased use of
media-streaming devices received as gifts during the holiday season. See the section entitled "Business Trends" in Item€7 of this
Annual Report on Form€10-K for a more complete description of the seasonality of our financial results.
We changed our fiscal year to the calendar twelve months ended December 31 to align with the advertising industry’s
business cycle, effective beginning with the period ended on December 31, 2013. The results of our fiscal quarters prior to 2014
(three months ended April 30, July 31, October 31 and January 31 of each year) reflect the same effects of the seasonal trends
on advertising revenue discussed above for calendar periods, except that the impact of these advertising sales-related trends on
our fiscal results was not as pronounced due to the inclusion of January instead of October in our fourth fiscal quarter.
Intellectual Property
Our success depends in part upon our ability to protect our technologies and intellectual property. To accomplish this, we
rely on a combination of intellectual property rights, including trade secrets, patents, copyrights, trademarks, contractual
restrictions, technological measures and other methods. We enter into confidentiality and proprietary rights agreements with our
employees, consultants and business partners, and we control access to and distribution of our technology and proprietary
information.
We have filed and acquired dozens of active patent applications and issued patents across the world, and we continue to
pursue additional patent protection, both in the United States and abroad where appropriate and cost effective. In December
2014, we purchased certain patents covering technologies used in internet radio from Allied Security Trust. In June 2013, we
purchased certain patents covering technologies used in internet radio from Yahoo! Inc. for $8.0 million in cash. We intend to
hold these patents purchased from Allied Security Trust and Yahoo! Inc. as part of our strategy to protect and defend Pandora in
patent-related litigation. We also acquire patents and patent applications from time to time as part of other transactions,
including our recent acquisition of assets from Rdio, Inc. in December 2015.
Our registered trademarks in the United States include "Pandora," the "Music Genome Project," and "Ticketfly," in
addition to a number of Pandora logos and other Pandora marks. "Pandora" is also registered in Australia, Canada, Chile, the
European Union, India, Israel, Korea, Mexico, New Zealand, Switzerland, Taiwan and other countries. "Music Genome
Project" is also registered in Australia, Canada, China and New Zealand. We have pending trademark applications in the United
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