Pandora 2016 Annual Report Download - page 58

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We track LPMs and analyze them in combination with our analysis of RPMs as they provide a key indicator of our
profitability. LPMs are relatively fixed licensing costs with scheduled annual rate increases that drive period-over-period
changes in LPMs. As such, the margin on our business varies principally with variances in ad RPMs and subscription RPMs.€
Estimated RPMs and LPMs by Platform
We also provide estimates of disaggregated ad RPMs, subscription RPMs, total RPMs and related LPMs€for our
computer platform as well as our mobile and other connected devices platforms, which we calculate by dividing the estimated
revenue and costs generated through the respective platforms by the number of thousands of listener hours of our services
delivered through such platforms. While we believe that such disaggregated data€provides directional insight for evaluating our
efforts to monetize our service, we do not validate such disaggregated data€to the level of financial statement reporting. Such
data should be seen as indicative only and as management's best estimate.
Period-to-period results should not be regarded as precise nor can they be relied upon as indicative of results for future
periods. In addition, as our business matures and in response to technological evolutions, we anticipate that the relevant
indicators we monitor for evaluating our business may change.
The table below sets forth our RPMs and LPMs, including total, computer and mobile and other connected devices, on an
ad, subscription and total basis for the eleven months ended December 31, 2013 and the twelve months ended December€31,
2014 and 2015.
Eleven Months
Ended€
€December 31,
Twelve Months Ended€
€December 31,
2013 2014 2015
RPM LPM* RPM LPM* RPM** LPM*
Advertising
Computer $56.79 $18.94 $62.00 $20.76 $67.99 $28.79
Mobile and other connected
devices 31.97 18.63 37.84 20.23 47.56 25.68
Total advertising $36.70 $18.69 $41.66 $20.31 $50.52 $26.13
Subscription
Computer $52.38 $31.83 $60.56 $33.37 $71.75 $45.70
Mobile and other connected
devices 57.77 33.87 82.25 37.41 86.80 49.18
Total subscription $56.27 $33.30 $76.89 $36.41 $83.66 $48.45
Total
Total computer $56.01 $21.23 $61.74 $23.02 $68.63 $31.68
Total mobile and other connected
devices 34.98 20.41 42.77 22.14 52.13 28.42
Total $39.22 $20.57 $45.97 $22.28 $54.65 $28.92
* Under the Pureplay Settlement, we pay per-performance rates for the streaming of sound recordings for our
Pandora One subscription service that are higher than the per-performance rates for our non-subscription, ad-
supported service.
**The calculation of RPMs does not include revenue generated by Ticketfly or Next Big Sound.
Total Ad RPMs€
For the twelve months ended December 31, 2015 compared to 2014, total ad RPMs increased primarily due to an
increase in ad RPMs on the mobile and other connected devices platform.€Ad RPMs on the mobile and other connected devices
platform increased as advertising revenue growth outpaced the growth in advertising listener hours as a result of an increase in
the average price per ad sold on that platform, due in part to our increase in relative volume of local ad sales.
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