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From the most recent 10Q. Revenue was $125M ($105 Ads / $20 Subscriber). Expenses: $82M Content, $10M hosting, $7M Prod Dev., $40M Marketing/Sales, $14M All O

From the most recent 10Q. Revenue was $125M ($105 Ads / $20 Subscriber). Expenses: $82M Content, $10M hosting, $7M Prod Dev., $40M Marketing/Sales, $14M All Other. Net Result: $28M loss.

chiph 13y ago
I wonder how much of that marketing costs are from their own interstitial ads between songs? I would think the cost to them is $0, but I wouldn't be surprised if they valued it at market rates. Perhaps to keep the IRS happy.
- awa 13y ago
  If they show a expenditure of $40M in MArketing for pandora ads, they are probably adding that $40M to their revenue
  - jcampbell1 13y ago
    You can't do that with public financial statements. When preparing financial statements, there is a process called intracompany balancing, where you pull out any revenue/expenses that were generated within the reporting entity. If that nonsense was allowed, then every company would show revenues in the billions. The finance department would pay the the HR department for HR services, the marketing department would buy millions with their own company, etc. It is common for internal accounting books to record these intracompany expenses/revenues for record keeping. For instance a TV Show pays for ads on the same network, but before Disney reports profits publicly all of that accounting cruft must be removed.
    - gohrt 13y ago
      Or they spin off sort-of-separate entities to move the profits around (Hollywood Accounting)
      - epa 13y ago
        Not allowed. Any related parties have to be disclosed and will be removed on consolidation of financial statements. Unless both parties are totally separate entities with no relation, we are moving into fraud territory.
      - tsotha 13y ago
        That only works between entities in different countries, though they can use the strategy to dodge liabilities.
- jcampbell1 13y ago
  > I wonder how much of that marketing costs are from their own interstitial ads between songs? Zero. Marketing and Sales is primarily the cost of selling advertisements, including all the required employees. Selling $100M worth of ads isn't easy, (unless you are google).
- winterchil 13y ago
  This would absolutely not make the IRS happy.
  - Guvante 13y ago
    So long as you count it as revenue and aren't publicly traded you are fine. Pretty sure anyone subject to the real rules is disallowed from doing this thanks to the dot com boom/bust.

From the most recent 10Q. Revenue was $125M ($105 Ads / $20 Subscriber). Expenses: $82M Content, $10M hosting, $7M Prod Dev., $40M Marketing/Sales, $14M All Other. Net Result: $28M loss.

chiph 13y ago

I wonder how much of that marketing costs are from their own interstitial ads between songs? I would think the cost to them is $0, but I wouldn't be surprised if they valued it at market rates. Perhaps to keep the IRS happy.

awa 13y ago
If they show a expenditure of $40M in MArketing for pandora ads, they are probably adding that $40M to their revenue
- jcampbell1 13y ago
  You can't do that with public financial statements. When preparing financial statements, there is a process called intracompany balancing, where you pull out any revenue/expenses that were generated within the reporting entity. If that nonsense was allowed, then every company would show revenues in the billions. The finance department would pay the the HR department for HR services, the marketing department would buy millions with their own company, etc. It is common for internal accounting books to record these intracompany expenses/revenues for record keeping. For instance a TV Show pays for ads on the same network, but before Disney reports profits publicly all of that accounting cruft must be removed.
  - gohrt 13y ago
    Or they spin off sort-of-separate entities to move the profits around (Hollywood Accounting)
    - epa 13y ago
      Not allowed. Any related parties have to be disclosed and will be removed on consolidation of financial statements. Unless both parties are totally separate entities with no relation, we are moving into fraud territory.
    - tsotha 13y ago
      That only works between entities in different countries, though they can use the strategy to dodge liabilities.
jcampbell1 13y ago
> I wonder how much of that marketing costs are from their own interstitial ads between songs? Zero. Marketing and Sales is primarily the cost of selling advertisements, including all the required employees. Selling $100M worth of ads isn't easy, (unless you are google).
winterchil 13y ago
This would absolutely not make the IRS happy.
- Guvante 13y ago
  So long as you count it as revenue and aren't publicly traded you are fine. Pretty sure anyone subject to the real rules is disallowed from doing this thanks to the dot com boom/bust.