Somehow in the last year, even as Spotify, Rdio, MOG, Rhapsody and iHeartRadio flooded the market with new, revamped and–most importantly–free music streaming options, Pandora managed to increase its market share. The company said today that it holds a 69% share of the digital listening market in fiscal 2012 according to Triton Digital, an increase of something like 20% over the year prior.

The old big thing in streaming music is still, apparently, the biggest thing.

That didn’t stop Wall Street from brutalizing the company’s stock after it missed fourth quarter earnings expectations today. Pandora wasn’t profitable in Q4, typically the biggest quarter of the year for ad sales, even though it was profitable (narrowly) in Q3. Last quarter, Pandora lost $8.2 million. That’s an even wider loss than it saw in Q4 one year ago. Shares fell 20% in after hours trading.

Still, the company’s listening hours grew significantly. It even grew its market share against traditional radio; claiming to have taken 5.74% of the market share there. That’s more than double where it stood a year ago. (I use the word claimed because this is a figure Pandora generates internally, and traditional radio execs like to call it make-believe).

The problem is that growth in market share doesn’t make Pandora an attractive investment, at least in the short term. The company is an advertising business with debilitatingly high content costs. Meanwhile its traditional radio partners pay next to nothing, comparatively for licensing and content costs.

Pandora needs a larger piece of the $17 billion in yearly traditional radio advertising spending to move over to the $800 million pool of digital audio advertising. It needs it to move fast, before its content costs eat it alive.

Most of the ad spending on Pandora and other digital streaming services comes from advertisers’ allocations for digital ad spending, not the traditional radio allocation. Pandora is quickly adding ad sales execs with ties to local, traditional markets to convince more advertisers to make the shift over, but it’s not happening very quickly.

Making the problem worse is that 70% of Pandora’s music is now streamed via mobile. The growth in usage there is “stratospheric,” the company said.

But mobile ads suck, and the ad dollars just aren’t there. Pandora said it’s the second largest recipient of mobile ad dollars after Google, but being the number two in an approximately $1.5 billion market isn’t that exciting when you’re bleeding money out the ears with each song streamed.

Pandora pays more than its competitors for content acquisition costs because it negotiates  royalty rates for songs through SoundExchange instead of directly with the labels. The company has been public for the better part of a year–the pressure is on for it to snap up ad dollars as quickly as it’s taking market share.