Pandora downsizing, moving some operations out of California

The nation's oldest music streaming services is, once again, downsizing its California operations and moving some to other locations. Competition has opened up a Pandora's Box for the pioneer.

Long before there were smart phones, smart watches and digital tablets, Pandora was streaming music to a growing audience of users nationwide. Now, it appears that both competition and skyrocketing operational costs, salaries and rents, are making other places more attractive. 

By the end of March, Pandora, the 18-year-old Oakland-based music streaming service, plans to be 100 employees lighter, laying off about 5% of its workforce. It’s part of an effort to cut expenses by $45 million per year. 

Music steaming has proved to be a far tougher, more crowded and competitive business than Pandora initiated and still leads. 

"They were once the only Big Kahuna, but now, they're up against Spotify and Apple Music and other streaming services," said Larry Magid, one of Silicon Valley's most known and quoted tech analysts.

In the first nine months of last year, it lost more than a half billion dollars and its stock price is down 62 percent from a year ago. In fact, one year ago, Pandora let go of 7% of its workers. Though it will remain headquartered in Oakland, further planned expansions will take place in Atlanta, which has lower salaries, rents, home prices and costs for businesses and their employees. 

"It makes sense, in this day and age – especially when you don't need highly skilled engineering talent – to do it elsewhere. And even engineering talent is generally more available around the country today than it was 18 years ago when Pandora came into existence," said Magid. 

But, cautions Magid, because Pandora was nimble enough to survive and thrive through 18 years of new platforms, technologies and changing consumer tastes, it can reinvent and innovate itself again. 

"The only companies in tech that are not innovators are either dead or dying," said Magid.

With almost $2 billion in revenues, Pandora just might be able to resuscitate itself one again.