You're right, which is why Pandora has been relying on investor capital for over a decade, and Spotify is right behind them. They haven't had a profitable year yet and they don't have a viable model.
Our business model, on the other hand, would be highly profitable at anything over about $1M in annual revenue, up to $100M, without playing any commercials. The problem was not our business model, as it is for most companies in our space. It was our inability to scale the audience to the point of sustaining $1M in annual airtime sales because the product wasn't yet sticky enough. That was a factor of being underfunded and trying to do too many things at once.
The capital thing wasn't an excuse. We tried to start a far more difficult business than (also failing) companies in the space, with a fraction of their capital. If we had an engineering team of 10 people and a ton of money to acquire content, there is no question we could have built a stickier service, and the unit economics were already great.
Our business model, on the other hand, would be highly profitable at anything over about $1M in annual revenue, up to $100M, without playing any commercials. The problem was not our business model, as it is for most companies in our space. It was our inability to scale the audience to the point of sustaining $1M in annual airtime sales because the product wasn't yet sticky enough. That was a factor of being underfunded and trying to do too many things at once.
The capital thing wasn't an excuse. We tried to start a far more difficult business than (also failing) companies in the space, with a fraction of their capital. If we had an engineering team of 10 people and a ton of money to acquire content, there is no question we could have built a stickier service, and the unit economics were already great.