• by Erik Sass  @eriksass1, June 10, 2011

Pandora Media, the nation's largest Internet radio company, is raising the price of its planned IPO in response to growing investor demand, according to an SEC filing by the company made public Friday.

Originally intended to go public at a price of $7 to $9 per share, Pandora raised the price from $10 to $12 -- which would net the company up to $200 million, while valuing it at about $2 billion. The music entity also said it would sell 14.7 million shares, up from the original plan of 13.7 million shares.

Pandora is riding the wave of investor interest in social media, but also suffers from some of the same shortcomings as other social media companies; namely, continuing uncertainty about its business model.

Most of its revenue comes from online and mobile display and audio advertising, but it's not clear whether these will offset growing costs from song royalty payouts. Pandora's total revenues climbed from $55 million in 2009 to more than $100 million in 2010. Plus, the 2009 figure included a loss of $28 million, and 2010 saw a loss of $17 million.

What isn't in question is the service's popularity.

In February, Pandora claimed a total membership base of 80 million, with 30 million users per month. In September 2010, Nielsen reported the Pandora app was one of the five most popular smartphone apps in U.S. What's more, at the beginning of this year, it was the second most downloaded free iPhone app in history, and the No. 1 download among free iPad apps.

A terrifically competitive arena, Pandora competes with music subscription services like iTunes, as well as cloud-based services from Amazon, Google and Apple.