With over 79 million monthly active listeners tuning in last quarter alone, Pandora Media (NYSE:P) arguably has a better grasp than any other company on consumers' music preferences. After all, the Internet music streaming company largely made its name by allowing listeners to create "stations" based on a particular artist or genre, which, in turn, could be customized based on whether the user liked or disliked each song.

Pandora's "Next Big" thing
But lucky for investors, Pandora is about to get even better at what it does best. To be sure, Pandora recently announced it has acquired Next Big Sound, a music data analytics service that could not only help it become more attractive to consumers and artists, but also significantly increase Pandora's value proposition to advertisers.

Since launching in 2009, Next Big Sound has collected "public social data for hundreds of thousands of artists," which it then correlates with its own proprietary sales and streaming algorithms to help more than 85% of the recorded music industry make crucial marketing and promotional decisions. Next Big Sound also helps the music industry quantify social media exposure, understand the impact of their marketing and promo events, and even deploy predictive algorithms to identify high-potential artists earlier in their careers.

Regarding the aforementioned 85% figure, Next Big Sound elaborates on its website: "These trusted partnerships with labels, artist managers, publishers, agents, and major technology leaders are a large part of what makes Next Big Sound the definitive analytics and insights provider for the music industry."

If that quote sounds familiar, it's because Pandora management regularly voices similar goals regarding its own role in the music industry. During their most recent quarterly conference call, for example, Pandora CEO Brian McAndrews stated,

[...] 2015 is the year of conviction as we invest to strengthen our industry relationships, improve our product and deploy the force necessary to further strengthen our ad sales. Given these investments, we will continue to move decisively and assertively to capture the enormous market opportunity before us. [...] While we still have lots more work to do and investments to make, we're starting the year from a position of strength and we're very excited about our future.

Music to investors' ears
It would seem, then, Next Big Sound is an ideal fit to help Pandora not only improve the quality of its product, but also further its ambition to strengthen industry relationships. 

That's not to say Pandora has had trouble improving its top and bottom lines without Next Big Sound's help. Last quarter, Pandora increased revenue 28% year over year to $230.8 million. That includes a 35% jump in mobile sales to just over $181 million and a 67% jump in local advertising to $43.3 million. Advertising revenue overall increased 27% to $178.7 million. And though that translated to adjusted net loss of $24.9 million, or $0.12 per share, keep in mind in these early stages, Pandora is focused first on revenue growth and grabbing market share as it inches toward sustained profitability. What's more, analysts were anticipating sales of just $224.6 million and an even wider net loss of $0.17 per share.

The market was decidedly less impressed, however, with the size of Pandora's listener base, which grew only 5.1% year over year to 79.2 million -- or roughly 1 million listeners below consensus expectations. Even so, Pandora insists it expects to eventually grow to a base of around 100 million in the U.S., and that in the meantime investors should be paying more attention to the loyalty of those listeners instead. To be sure, Pandora's user engagement rose to an all-time high last quarter at 22.3 hours per active user per month, and also eclipsed a 10% share of the total U.S. radio listening market for the first time -- up from 9.1% in the same year-ago period.

As Next Big Sound helps Pandora better understand the preferences of its listeners, as well as how to most effectively reach them, it seems fair to expect this loyalty should only continue to increase. If that happens and Pandora continues to gradually take the remaining 90% market share its terrestrial competitors still command, an increased flow of advertising dollars into Pandora's coffers should follow. In the end, that's why I think investors would be wise not to underestimate the impact of Pandora's latest acquisition.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.