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Pandora buys music data cruncher Next Big Sound

By taking over a company that figures out the best tactics for music online, the biggest Internet radio service hopes to convince more labels and artists -- oh, and advertisers -- to join up.

Pandora purchased music analytics company Next Big Sound, which figures out things like the relationship between social media and revenue for music and the real effect of promotional events and marketing for artists. Joan E. Solsman/CNET

Pandora, the world's biggest streaming music service by users, Tuesday said it bought music analytics company Next Big Sound, another pitch to artists and labels that Pandora's accumulation of data makes it a valuable partner.

Pandora said the terms of the deal were confidential. Next Big Sound, which is based in New York, has more than 20 employees.

The move is Pandora's latest attempt to retune the music industry's perception of the company, away from aggravation to friend. Though it only operates in the US, Australia and New Zealand, Pandora is one of the top sources of global streaming revenue for the recording industry because of its popularity -- it had nearly 80 million active listeners at the end of March, compared with Spotify's 60 million total members. However, Pandora has had difficulty overcoming its history of irking the recording industry even as labels warm to streaming music as the likely source of most of its future revenue.

In addition, Next Big Sound's capabilities can be applied to brands that advertise on Pandora, the company said. The vast majority of Pandora's own revenue comes from advertising, so its acquisition is a move to enhance its own money-making power, too.

Launched in 2009, Next Big Sound analyzes music data to help the industry understand the relationship between social media and revenue, see the effect of marketing and promotional events like new releases and TV appearances and help identify high-potential artists early.

Pandora Chief Executive Brian McAndrews said the combination of Pandora's listening data and Next Big Sound's analytical capabilities will create a vital source of information. As the biggest ongoing site of streamed music on the Internet -- excluding, perhaps, YouTube -- Pandora has unrivaled data on online listening habits. For example, listeners have clicked a "thumbs up" or "thumbs down" on song playing via Pandora more than 50 billion times.

In the last year, Pandora has made inroads with the recording industry, through such moves as its first direct deals with labels and an effort to let artists delve into its wealth of data.