Pandora 2016 Annual Report Download - page 43

The application of indirect taxes (such as sales, use, excise, admissions, amusement, entertainment or other transaction-
based taxes) to internet-based live entertainment ticketing businesses such as Ticketfly is a complex and evolving area. Many of
the fundamental statutes and regulations that impose these taxes were established before the adoption and growth of the internet
and ecommerce. In many cases, it is not clear how existing statutes apply to the internet or ecommerce. In addition,
governments are increasingly looking for ways to increase revenues, which has resulted in discussions about tax reform and
other legislative action to increase tax revenues, including through indirect taxes. Changes in these tax laws could adversely
affect our business.
€
Ticketfly is not the seller of tickets sold on the Ticketfly platform.€ Instead it facilitates the transaction between our
venue partners and customers. If a taxing jurisdiction were to treat Ticketfly as the seller and liable for the tax of the venue
partners or customers, it could result in a material liability.
€
Ticketfly does not currently calculate all applicable indirect taxes on the fees charged when a customer purchases tickets
on the Ticketfly platform.€Some jurisdictions may interpret their law in a manner that would require Ticketfly to calculate,
collect and remit the applicable indirect taxes on the entire charges. Such an interpretation could negatively impact our
customers and our business.€
We depend on key personnel to operate our business, and if we are unable to retain, attract and integrate qualified
personnel, our ability to develop and successfully grow our business could be harmed.
€
We believe that our success depends on the contributions of our executive officers as well as our ability to attract and
retain qualified sales, technical and other personnel. All of our employees, including our executive officers, are free to
terminate their employment relationship with us at any time, and their knowledge of our business and industry may be difficult
to replace. Qualified individuals are in high demand, particularly in the digital media industry and in the San Francisco Bay
Area, where our headquarters are located, and in New York, and we may incur significant costs to attract them. If we are unable
to attract and retain our executive officers and key employees, we may not be able to achieve our strategic objectives, and our
business could be harmed. We use share-based and other performance-based incentive awards such as restricted stock units and
cash bonuses to help attract, retain, and motivate qualified individuals. If our share-based or other compensation programs
cease to be viewed as competitive and valuable benefits, our ability to attract, retain, and motivate employees could be
weakened, and our business could be harmed.
€If we cannot maintain our corporate culture as we grow, we could lose the innovation, teamwork and focus that contribute
crucially to our business.
€
We believe that a critical component of our success is our corporate culture, which we believe fosters innovation,
encourages teamwork, cultivates creativity and promotes focus on execution. We have invested substantial time, energy and
resources in building a highly collaborative team that works together effectively in a non-hierarchical environment designed to
promote openness, honesty, mutual respect and pursuit of common goals. As we continue to develop the infrastructure of a
public company and grow, we may find it difficult to maintain these valuable aspects of our corporate culture. Any failure to
preserve our culture could negatively impact our future success, including our ability to attract and retain employees, encourage
innovation and teamwork and effectively focus on and pursue our corporate objectives.
€
The impact of worldwide economic conditions, including the effect on advertising budgets and discretionary entertainment
spending behavior, may adversely affect our business and operating results.
€
Our financial condition is affected by worldwide economic conditions and their impact on advertising spending.
Expenditures by advertisers generally tend to reflect overall economic conditions, and reductions in spending by advertisers
could have a serious adverse impact on our business. In addition, we provide an entertainment service, and payment for our
Pandora One subscription service may be considered discretionary on the part of some of our current and prospective
subscribers or listeners who may choose to use a competing free service or to listen to Pandora without subscribing. To the
extent that overall economic conditions reduce spending on discretionary activities, our ability to retain current and obtain new
subscribers could be hindered, which could reduce our subscription revenue and negatively impact our business.
€
Our business is subject to the risks of earthquakes, fires, floods and other natural catastrophic events and to interruption by
man-made problems such as cyber-security incidents or terrorism.
€
Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses,
telecommunications failures, terrorist attacks, acts of war, human errors, break-ins or similar events. For example, a significant
natural disaster, such as an earthquake, fire or flood, could have a material adverse effect on our business, operating results and
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