Pandora became the second relatively “old” startup (after LinkedIn) to go public recently, opening at $20 with a valuation north of $3 billion. The personalized digital radio service more than doubled its quarterly revenue to $50 million. It’s still losing money due to high marketing costs (growing its ad sales force and acquiring users) and paying music royalties that total 45% of revenues. And those rates are set to increase somewhat for the next few years. Henry Blodget thinks Pandora will be able to negotiate better rates as it gains scale. But right now it’s mostly paying compulsory license fees that are set by the copyright board. Pandora makes over 80% of its money from advertising, although its ad-free premium subscriptions business is growing a little faster. And it’s looking to do more distribution deals with auto and device manufacturers. Overall, the average consumer spends more time listening to the radio than listening to his own collection. So, call me conservative, but I’m more bullish on Pandora’s prospects – if it can make the numbers work – than those of on-demand services like Rhapsody and Spotify, let alone group-listening companies, no matter how lively.