Pandora, the pioneering online music service that creates personalized "radio stations" based on songs that users like, filed documents late Friday for an initial public stock offering worth up to $100 million.
The filing makes Oakland-based Pandora the second well-known Internet startup to announce plans to go public in as many weeks, after a similar filing last month by LinkedIn, an online networking and résumé service for professionals.
Pandora, which launched in 2000, says it has 80 million registered users and delivered 3.9 billion hours of music to listeners in its last fiscal year.
The business started with founder Tim Westergren's idea for creating software that analyzes a favorite song for a variety of attributes and then uses that analysis to recommend other songs with similar features. It now boasts a library of more than 800,000 songs.
While the company said its revenue is growing, it has struggled financially in the past and still has not become profitable, according to its regulatory filing. Pandora said it had revenue of $55.2 million in its fiscal year that ended Jan. 31, 2010, with a net loss to common stockholders of $24.9 million.
Most of the company's revenue comes from advertising, although it offers a premium, fee-based service to listeners, as well as a basic free model. Its biggest operating expense is licensing rights to music, for which it spent almost $33 million in the same year.
"We are redefining radio" from the traditional broadcast model of one station for many listeners, "to a truly personalized, one-to-one radio listening experience," the company said in papers filed with the Securities and Exchange Commission.
The company's filing suggests it is getting closer to profitability: It reported $90 million in revenue for the three quarters that ended Oct. 31, and a loss to common stockholders of $7 million.
In a list of potential risks to its business model, Pandora noted that it depends on a host of licensing agreements and regulations. Under those arrangements, its costs for acquiring "content" will increase as it streams more hours of music and as its own revenue rises.
A Pandora spokeswoman declined to comment Friday. The filing did not specify a date for the offering and said the amount is subject to change.
While the rate of tech IPOs has fallen dramatically in recent years, many investors and entrepreneurs have been watching closely for a new wave of offerings by online businesses. Brian Erb, a lawyer who handles IPO issues for the San Francisco firm Ropes & Gray, said he doesn't expect Pandora will have the broader significance of more anticipated IPOs by social media companies like LinkedIn, Facebook or Zynga.
"I doubt Pandora is going to be a bellwether for what happens with the rest of these companies," Erb said. "My guess would be that this is an attempt to follow on the heels of LinkedIn."
Investors may be concerned that Pandora's filing says at least some insiders may sell their stock at the time of the IPO, Erb added.
Pandora said its biggest investors are Crosslink Capital, Walden Venture Capital, Greylock Partners, Labrador Ventures and the Hearst Corporation.