Pandora has named Brian McAndrews, a former Microsoft executive, as its new CEO, the web-radio service said in a statement. McAndrews is taking over for Joe Kennedy, who earlier in the year announced he would step aside.

With the hire, Pandora showed where its priorities are. Most of Pandora's revenues are generated through advertising and McAndrews is an experienced marketing and advertising exec, one who was with a venture capital company for several years after leading Microsoft's advertiser and publisher solutions. He landed at Microsoft after the software maker acquired aQuantive, a digital marketing company where he was CEO.

"We had very specific criteria for our new CEO," said Tim Westergren, Pandora’s founder and chief strategy officer. "We were very strategic about finding the right person — Brian is that person. No one better understands the intersection of technology and advertising, which he clearly demonstrated during aQuantive’s meteoric rise."

"No one better understands the intersection of technology and advertising."

For awhile, the rumors were that Pandora was interested in hiring a marquee name, someone with a background in radio and music, such as Mel Karmazin, the former CEO of Sirius XM. There was another camp that believed Pandora  wanted someone who was a proven winner at digital entertainment, maybe somebody like Jason Kilar, the former chief of Hulu. Some observers speculated that Pandora would want someone who had experience getting legislation passed, since Pandora has tried for more than a year to convince Congress to lower the royalties it pays to play music.

McAndrews becomes chief of one of the fastest-growing music services online, but he also takes control at a time when Pandora faces a crowded field of competitors. Google's Android, Apple, and Microsoft have already begun offering streaming music. Beats by Dre and YouTube are expected to get their subscription services off the ground before the end of the year. At the same time, Pandora is looking to reach profitability on a consistent basis. McAndrews has his work cut out for him. The good news is that Wall Street seems pleased by the news. In after-hours trading, Pandora's stock was up 6 percent to $22.70.