10/3/13: Rdio pivots on Cumulus deal to provide unlimited ad-supported listening

Brad Hill
October 3, 2013 - 1:05pm

That didn’t take long. Today, just 12 business days after announcing a partnership with Cumulus Radio, Rdio introduces a major service change by releasing a free, unlimited version of its Internet radio capability to Android and iOS mobile devices, and rebranding it “Stations.” As with similar offerings in Spotify (Rdio’s most direct competitor), Pandora and iTunes Radio, the Stations experience is ad-supported, or will be. At launch, mobile listeners will get an ad-free experience; desktop customers will see and/or hear commercials.

The announcement signifies quick progression of the quasi-acquisitional BizDev arrangement between Rdio and Cumulus, which includes handing over Rdio’s ad inventory to the Cumulus sales force. With Cumulus resources, Rdio adds an advertising component to its revenue model.

Pre-Cumulus, Rdio offered Internet-radio style listening as part of its paid subscription package in the mobile app -- new mobile users were granted a 14-day free trial. If the user canceled, the free version of Rdio’s mobile app became useless and Rdio lost a mobile customer. Desktop users got a better deal, with six months of test driving the subscription package, followed by a reversion to radio-style listening via a computer.

Rolling out uncapped listening in mobile brings Rdio to parity with its competitors. That’s an arguably overdue piece of positioning, and reflects back on the importance of the Cumulus partnership. Rdio is now a full-bore freemium service, with a feature set that traces a standard outline found in Spotify and iTunes Radio. Rdio’s business will continue to have a subscription side -- users may opt to dish out for accessing interactive features like on-demand listening and downloading.

The standardization of this model illuminates a crowded field. Internet radio enterprises are committed to a matrix of interlocking forces: scale, time, marketplace migration, and customer churn. The marketplace is widening over time, as new listeners either migrate from AM/FM or add Internet listening to new day parts. New services like iTunes Radio attract attention and attempt to steal share from competitors. Given the cost of content and delivery, music streaming is a difficult business from a direct-revenue standpoint.

With all this it is easy to imagine consolidation in the future, with two or three major players dominating the space. Leading up to upcoming moments of truth, platforms like Rdio are developing at a rapid pace to retain and grow their audiences.

Brad Hill
October 3, 2013 - 1:05pm

Inside Radio reported new diary-based research indicating that AM/FM radio occupies at least two-thirds of audio minutes heard across generational divides. The study is branded by USA TouchPoints, a metered-behavior service launched in 2011 under the wing of the Media Behavior Institute (MBI).

The USA TouchPoints study could be framed as a counterpoint to the recently released Edison Research package, “The New MainStream.” The Edison survey focused on reach, revealing a data set in which 53 percent of online Americans listen to Internet radio to some extent. The USA TouchPoints focus is time spent, making two main assertions. First, that AM/FM represents about two-thirds of consumed audio minutes, while “Music Streaming Service” receives five to six percent of listening minutes. Second, that AM/FM occupies 23 percent of user engagement with all measured mediums. (The Internet as a whole got 18 percent, and television 57 percent.)

USA TouchPoints owns, or owned, mobile diary software derived in 2010 from the IPA TouchPoint study in the U.K. The measuring mandate extends beyond radio to the media landscape generally, intending to track consumer engagement with TV, radio, Internet, magazines and newspapers. USA TouchPoint’s original user panel was sized at 1,000 testers, each using an iPhone diary app. User effort was considerable, requiring each panelist to track location, social setting, and life activity along with specific media consumption, an average of 15 times a day for at least seven days, according to this documentation.

NOTE: According to the Media Behavior Institute’s website, the MBI discontinued operation in July of this year, with USA TouchPoints to follow. A brief notice states: “Unfortunately, the Media Behavior Institute will cease operations on July 31, 2013. Despite a growing client list, industry adoption of USA TouchPoints has not been sufficient and as a result, plans are underway to wind down the company.” Phone queries from RAIN have not been returned.


The key findings of this study comport pretty closely with what others have found — e.g., the split of consumers' music/audio listening time is about 80% radio (all forms) and 20% personal music collections, TV gets about twice as much usage as radio, and so forth.

Internet radio's share of total radio listening in this study seems to be 7.5% — i.e, 6% of radio's 80% of audio usage. This seems a bit lower than other studies suggest — especially among younger demos — which could be for one of two reasons:

(1) The iPhone-based diary was apparently hierarchical: When reporting what one was doing at the moment, it seems that first one had to pick "Radio" or "Internet Entertainment," then one picked either a radio format (e.g., country) or an streaming provider. It's possible that young people who consider Pandora, for example, to be "radio" would have gone down the former path, and if so their listening could have been counted in the wrong bucket.

(2) In both today's "Inside Radio" story and the firm's 22-page PDF that describes its methodology, we couldn't find the date the study was conducted. If the survey tracking was conducted more than a year ago, then the numbers would seem to be about right. --KH

Brad Hill
October 2, 2013 - 12:30pm

Eddy Cue, Apple’s head of Internet Software and Services, and chief of iTunes and iTunes Radio, indicated in a recent interview that streaming Justin Timberlake’s new album a week before its release won’t be the last promotion of its kind. Without revealing any numbers, Cue said it was a perfect application of iTunes Radio. The iTunes Music Store has streamed preview albums in the past, but (as noted by Cue), the Radio environment is a more natural setting for long-form listening than a store.

Using radio to preview not-yet-released music is not new. Singles have received weeks of broadcast airplay to build demand. But mp3 eroded the efficacy of that, as P2P file-sharing, then the iTunes store (which opened in 2003) blurred the line between unreleased and released. Building demand started to feel like artificial friction in a marketplace where instant availability crossed back and forth between legal and illegal realms. Copyright infringement is a nuance that escapes many consumers, but digital availability has become an obvious and compelling fact of life

David Joseph, CEO of Universal Music U.K. and Ireland, noted in 2011 an interesting observation: "What we were finding under the old system was the searches for songs on Google or iTunes were peaking two weeks before they actually became available to buy, meaning that the public was bored of – or had already pirated – new singles.”

When the radio station is owned by the record store (as in Apple’s case), and both pay royalties to the labels, synchronizing release windows to consumer demand is solved. Release is a wave, not a particle. To many users, especially those invested in access-as-ownership, Justin Timberlake’s album was “released” on the first day of the preview stream. The download side of Apple’s merchandising benefited not only from preview build-up, but also from providing universal review access, which resulted in pre-sale reviews published in MTV, L.A. Times, New York Daily News, Washington Post, Variety, SPIN, Vulture, and dozens of other outlets. (Some of those skewering diatribes probably hurt iTunes download sales.) 

Whole-album Internet radio promotion is an intriguing experiment for all stakeholders. It solves piracy to some extent, and also hints at reviving albums from the fragmenting single-song marketplace. When you spend a week luxuriously accustoming listeners to a packaged collection, with no revenue damage, you encourage packaged buying down the funnel. At this writing, Timberlake’s album sits at #1 in the iTunes Store Albums chart, while the Songs chart doesn’t show his name until #31. Darn right Eddie Cue is going to repeat this experiment.

Brad Hill
October 3, 2013 - 1:05pm

Library music streaming: You can borrow ebooks from public libraries with an intermediary app called OverDrive. Now, a similar service has arrived for borrowing music and movies from local libraries, assisted by software app Hoopla. Hoopla stands between provider (media owners) and libraries, which must grapple with a buying model different from CDs and DVDs. The result, when it all comes together, is that library patrons can “borrow” music and movie titles by streaming them. Only a few dozen libraries across the U.S. are in the program currently.

SoundExchange celebrates its 10th: Anniversary, that is. SoundExchange, an important part of the commercial music ecosystem, is a performing rights organization that collects and distributes royalties to musicians and labels. Those royalties derive from many different venues, though broadcast radio is legally exempt from paying royalties to performers and labels. (Some broadcast groups do pay artist/label royalties in accord with open-market negotiation. That is a key point in the recently introduced Free Market Royalty Act.) Here is an infographic summarizing SoundExchange’s growth and collection amounts.

Jeff Price unloads: Jeff Price, founder of Audiam (which finds and distributes hidden royalties on YouTube) and TuneCore (a digital distributor of independent music), unleashes a meaty rampage (here) on the thesis of why selling music is no longer important in the age of Internet radio. “Spotify doesn’t need to stream the music it carries, nor be profitable from those songs it does stream, in order for its investors and owners to reach their financial finish line of selling the company or taking it public to make billions.” It might seem unusual for an accomplished venture entrepreneur to expound an Occupy Startups theme, but it does provide a knowing perspective.