Report: Pandora Increasing Commercial Content

Pandora's "ad load rate is gradually increasing, while still staying within a tolerable range well below terrestrial ad load rates," wrote Rosenblatt Securities analyst Martin Pyykkonen in a research note, according to Investor's Business Daily.

Pandora is averaging six ads per hour this year vs. four per hour in 2014, Pyykkonen said. "Pandora's national load is still well under the nearly intolerable terrestrial radio (ad) load of 15-minutes."

Incorporating Pandora into automobile entertainment systems "should be an upside driver for Pandora, especially for local audio ads," he said. With 9.5 million activated auto listeners, "the auto OEM and local auto dealer market presents upside for Pandora's usage growth," Pyykkonen said.

Pandora posted a Q3 earnings beat and its growth in active listeners slowed. The company's active listeners rose 5.2% in Q3 to 76.5 million, vs. 7.5% growth in Q2 and 8% in Q1.

In his Q3 earnings call with analysts in October, Pandora CEO Brian McAndrews urged analysts to keep the slowing growth in perspective, saying it was unrealistic to expect the company's monthly active user base to continue growing at historic rates, given its already significant market position and growing competition.