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Westergren was the prime architect of the Music Genome Project, which became Pandora. He served as Pandora's CEO and president from 2002 to 2004, and as its Chief Strategy Officer from 2004 to 2014.
"As the original founder, Tim carries the vision for how Pandora can transform the music industry and he is uniquely able to connect with listeners, music makers and employees," Chairman Jim Feuille said in a statement.
Stocks are down 10% in pre-market trading.
Westergren replaces Brian McAndrews, who has been Pandora's CEO since 2013. McAndrews is leaving the company, according to Pandora.
Rumors have swirled that Pandora is looking to sell itself.
Pandora's stock has plummeted in recent months, and its executives, including McAndrews have lashed out at rivals in the streaming industry for creating an unsustainable business environment by burning capital. Pandora, unlike rivals like Spotify, is a public company and has to answer to shareholders.
Pandora is a company in transition. Two recent high-profile acquisitions suggest it wants to break beyond "internet radio," and especially into on-demand streaming, which would put it into more direct competition with Spotify and Apple Music. Last November, Pandora bought key assets of embattled streaming service Rdio for $75 million, and the company has said these are critical to its plans to move into the on-demand arena.
In December, the US Copyright Royalty Board announced it would raise royalty rates for "webcasters" like Pandora in 2016. This decision didn't affect on-demand services like Spotify, and likely has pushed Pandora faster toward on-demand.
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