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Pandora to Run Audio Ads

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Pandora, the online music service that creates “radio stations” based on consumers’ musical preferences, is adding something else to the mix: commercials.

The service has experimented with audio ads but now will make them a regular part of the service, said Tim Westergren, Pandora’s founder. Westergren said the ads won’t be too obtrusive, though—just one 15-second commercial every “couple of hours.”

Clients for the service so far include Fox’s American Idol, speaker maker Bose and McDonald’s.

The service, launched in 2005, claims about 21 million registered users and 2 million regular users a day. Advertising is the company’s chief source of revenues. The service is free, though the company offers an ad-free paid service, which Westergren said has few subscribers.

The company also offers ads on its Web site and via the iPhone, where users see a small graphic ad at the bottom of the screen. Those who click through are directed to a landing site. The music continues uninterrupted throughout. Advertisers for that service have included Best Buy, Beck’s and Kraft, among others. Westergren said the click-through rates for iPhone ads are much higher than for Web-only ads. “People like playing with the iPhone,” he said.