Pandora 2016 Annual Report Download - page 33

• the need to localize our service to foreign customers’ preferences and customs;
• the need to conform our operations, and our marketing and advertising efforts, with the laws and regulations of foreign
jurisdictions, including, but not limited to, the use of any personal information about our listeners;
• the need to amend existing agreements and to enter into new agreements with automakers, automotive suppliers,
consumer electronics manufacturers with products that integrate our service, and others in order to provide that service
in foreign countries;
• difficulties in managing operations due to language barriers, distance, staffing, cultural differences and business
infrastructure constraints and domestic laws regulating corporations that operate internationally;
• our lack of experience in marketing, and encouraging viral marketing growth without incurring significant marketing
expenses, in foreign countries;
• application of foreign laws and regulations to us;
• fluctuations in currency exchange rates;
• reduced or ineffective protection of our intellectual property rights in some countries; and
• potential adverse tax consequences associated with foreign operations and revenue.
Furthermore, in most international markets, we would not be the first entrant, and our competitors may be better
positioned than we are to succeed. In addition, in jurisdictions where copyright protection has been insufficient to protect
against widespread music piracy, achieving market acceptance of our service may prove difficult as we would need to convince
listeners to stream our service when they could otherwise download the same music for free. As a result of these obstacles, we
may find it impossible or prohibitively expensive to enter or sustain our presence in foreign markets, or entry into foreign
markets could be delayed, which could hinder our ability to grow our business.
Expansion of our operations into content beyond pre-recorded music, including comedy, live events and podcasts, subjects
us to additional business, legal, financial and competitive risks.
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Expansion of our operations into delivery of content beyond pre-recorded music involves numerous risks and challenges,
including increased capital requirements, new competitors and the need to develop new strategic relationships. Growth into
these new areas may require changes to our existing business model and cost structure, modifications to our infrastructure and
exposure to new regulatory and legal risks, including infringement liability, any of which may require additional expertise that
we currently do not have. There is no guarantee that we will be able to generate sufficient revenue from advertising sales
associated with comedy, live events, podcasts or other non-prerecorded-music content to offset the costs of maintaining these
stations or the royalties paid for such stations. Further, we have established a reputation as a music format internet radio
provider and our ability to gain acceptance and listenership for comedy, live events, podcasts or other non-music content
stations, and thus our ability to attract advertisers on these stations, is not certain. Failure to obtain or retain rights to comedy,
live events, podcasts or other non-music content on acceptable terms, or at all, to successfully monetize and generate revenues
from such content, or to effectively manage the numerous risks and challenges associated with such expansion could adversely
affect our business and financial condition.
We have acquired, and may continue to acquire, other companies or technologies, which could divert our management’s
attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating
results.
We have recently acquired and may in the future seek to acquire or invest in businesses, products or technologies that we
believe could complement or expand our service, enhance our technical capabilities or otherwise offer growth opportunities.
For example, in 2015, we acquired Next Big Sound, Ticketfly and certain assets of Rdio. These acquisitions, and our pursuit of
future potential acquisitions, may divert the attention of management and cause us to incur various expenses in identifying,
investigating and pursuing suitable acquisitions, whether or not they are consummated. In addition, we have limited experience
acquiring and integrating other businesses. We may be unsuccessful in integrating our recently acquired businesses or any
additional business we may acquire in the future. For instance, our recent acquisition of certain assets of Rdio in order to
facilitate our intention to launch an on-demand service, will require time and resources. There is no assurance that we will be
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