Pandora 2012 Annual Report Download - page 43

Table of Contents
If we fail to detect click fraud or other invalid clicks on ads, we could lose the confidence of our advertisers, which would cause our business to suffer.
Our business relies on delivering positive results to our advertising customers. We are exposed to the risk of fraudulent and other invalid clicks or
conversions that advertisers may perceive as undesirable. A major source of invalid clicks could result from click fraud where a listener intentionally clicks on
ads for reasons other than to access the underlying content of the ads. If fraudulent or other malicious activity is perpetrated by others and we are unable to
detect and prevent it, or if we choose to manage traffic quality in a way that advertisers find unsatisfactory, the affected advertisers may experience or
perceive a reduced return on their investment in our advertising products, which could lead to dissatisfaction with our advertising programs, refusals to pay,
refund demands or withdrawal of future business. This could damage our brand and lead to a loss of advertisers and revenue.
Our success depends on our listeners' continued high-speed access to the internet and wireless devices and the continued reliability of the related
infrastructure.
Because our service is designed primarily to work over the internet, our revenue growth depends on our listeners' low cost, high-speed access to the
internet, as well as the continued maintenance and development of the internet infrastructure, including the wireless internet infrastructure. The future delivery
of our service will depend on third-party internet service providers and wireless telecommunication companies expanding high-speed internet access and
wireless networks, maintaining reliable networks with the necessary speed, data capacity and security, and developing complementary products and services
for providing reliable and timely wired and wireless internet access and services. The success of our business depends directly on the continued accessibility,
maintenance and improvement of the internet and, in particular, access to the internet through wireless infrastructure, to permit high-quality streaming of
content and provide a convenient and reliable platform for customer interaction. All of these factors are outside of our control.
To the extent that the internet and the wireless internet infrastructure continue to experience an increasing number of listeners, frequency of use and
expanding bandwidth requirements, the internet and wireless networks may become congested and unable to support the demands placed on them, and their
performance and reliability may decline. In addition, the wireless communications companies that provide our listeners with access to the internet through
wireless networks may raise their rates or impose data usage limits, which could cause our listeners to decrease their usage of our service or our listenership to
decline. Any future internet or wireless network outages, interruptions, bandwidth constraints, rate increases or data usage limits could adversely affect our
ability to provide service to our listeners and advertising customers.
Some of our services and technologies may use "open source" software, which may restrict how we use or distribute our service or require that we release
the source code of certain services subject to those licenses.
Some of our services and technologies may incorporate software licensed under so-called "open source" licenses, including, but not limited to, the GNU
General Public License and the GNU Lesser General Public License. Such open source licenses typically require that source code subject to the license be
made available to the public and that any modifications or derivative works to open source software continue to be licensed under open source licenses. Few
courts have interpreted open source licenses, and the manner in which these licenses may be interpreted and enforced is therefore subject to some uncertainty.
We rely on multiple software programmers to design our proprietary technologies, and we do not exercise complete control over the development efforts of
our programmers and we cannot be certain that our programmers have not incorporated open source software into our proprietary products and technologies
or that they will not do so in the future. In the event that portions of our proprietary technology are determined to be subject to an open source license, we
could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our technologies, or otherwise be limited in the
licensing of our technologies, each of which could reduce or eliminate the value of our services and technologies and materially and adversely affect our
ability to sustain and grow our business.
Government regulation of the internet is evolving, and unfavorable developments could have an adverse affect on our operating results.
We are subject to general business regulations and laws, as well as regulations and laws specific to the internet. Such laws and regulations cover
taxation, user privacy, data collection and protection, copyrights,
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