Pandora, the largest internet radio service, has held discussions about selling the company, according to people briefed on the talks.
Pandora is working with Morgan Stanley to meet with potential buyers, said the people, who spoke on condition of anonymity because they were discussing private matters. The talks are preliminary and may not lead to a deal, the people said.
For Pandora, it would be a curious time to sell. Its shares are yielding a market value of $US1.8 billion, down from more than $US7 billion two years ago. The stock has fallen more than 60 per cent since October.
Pandora has the largest number of users for music streaming, but the competition is encroaching. Spotify is said to be arming itself with another $US500 million in capital, and Apple Music recently surpassed 10 million paying users. Pandora's users peaked at 81.5 million at the end of 2014, declining to 78.1 million in the third quarter.
The company is spending heavily to attract more users, and its ability to make money from those users may be waning.
Pandora was introduced in 2005 and uses its own "music genome" technology to analyse its customers' musical tastes and feed them a radiolike stream tailored to what they like. The company generates 80 per cent of its revenue from advertising, allowing listeners to stream music free, with ads after every few songs. Pandora also has about 3.9 million customers who pay to remove the ads.
Last year, Pandora announced deals to pay $US450 million for Ticketfly, an online ticketing company, and $US75 million for the assets of Rdio, a struggling competitor.
Executives at Pandora, whose service is available only in the United States, Australia and New Zealand, have said that they want to expand around the world and turn Pandora into a more robust service that can compete with so-called on-demand outlets like Spotify, Rhapsody and Apple Music, which let users choose exactly what songs to listen to.
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