2/6/13: Pandora to end reseller program, staffs up local sales forces

Paul Maloney
February 6, 2013 - 1:05pm

Pandora VP/Sales Steven Kritzman told NetNewsCheck the webcaster is ending its efforts to have newspapers and TV sales forces represent it to local ad buyers. Instead, Pandora plans to beef up its own local sales teams.

In January, Arbitron filed suit against a Cleveland television station, accusing it of improper and unauthorized use of its data. Part of the Pandora reseller program, Gannett WKYC-TV allegedly distributed media kits that included 2011 PPM data and Arbitron trademarks. Pandora was not named in the lawsuit (more in RAIN here).

Kritzman told NetNews Check, "Nothing really beats having ownership over the training, the narrative and just having sellers that are specifically focused on your product." He says Pandora has recently expanded its sales force in markets like Phoenix, Denver, Las Vegas, Houston, Minneapolis, Miami, Washington, D.C., and Boston.

"At the end of the year we’ll be in the top 25 markets across the country with multiple people in each market," plus sales leadership in 27 out of the top 40 markets, he said.

Read more in NetNewsCheck here.

Paul Maloney
February 6, 2013 - 1:05pm

A forecast from a new eMarketer report, "Internet Radio: Marketers Move In," has the U.S. Internet radio audience growing 11.1% to 147.3 million this year. "Expansion will continue for the next several years, though rates will taper off to single-digit percentages," says eMarketer.

During that time, eMarketer expects U.S. Internet radio ad revenues to hit $970 million, then grow to $1.31 billion by 2016 (this includes all streaming, website, text, e-mail, and mobile advertising, and advertising on HD Radio). The news source points out that while positive, these growth forecasts are more modest than those for other digital media.

"Still, advertisers are eager to attach their brands to internet broadcasting and other music-streaming properties. There are several reasons for this, among them: the appeal of associating a brand with a particular genre or artist; the extent to which internet radio is driven primarily by ads; and the appeal of in-steam audio ads, which are harder to avoid or skip than other forms of digital advertising," reads the eMarketer press release.

See more, including a link to purchase the report, here.

Paul Maloney
February 6, 2013 - 1:05pm

Industry news source Digital Music News says the threat of rising music publishing royalties to music services like Pandora is growing -- pointing to hints that Universal Music Publishing will soon adopt the aggressive tactics recently employed by other major publishers.

Major publishing groups (which hold the copyright to written song compositions, for which broadcasters and webcasters alike must pay) like the now combined Sony/ATV and EMI Music Publishing announced last year they would cancel their "digital performance" contracts with performance rights organizations ASCAP and BMI (with whom services can license to access all the music the groups represent). The move frees the publishers from the rate-constraints imposed by the federal government, and forces services like Pandora to negotiate directly with the publisher for a license to perform its music.

In January came news (here) that Pandora's bill for Sony/ATV music went up 25% -- and that's for a one-year term which will need to be negotiated again.

Immediately industry observers began to warn (here) that publishing groups no longer subject to rate regulations can make life very difficult for those who'd license music. Billboard.biz reported this week UMPG has announced it will withdraw its digital rights from ASCAP and BMI (BMG Chrysalis has also negotiated the option to withhold its digital performance rights, but hasn't yet decided if it will.)

UMPG chairman/CEO Zach Horowitz told Billboard, "In order to ensure that our songwriters are fairly compensated, we believe the best approach is for us to negotiate directly with these services. For that reason we notified both ASCAP and BMI at the end of last year that we will be withdrawing our digital rights for controlled catalogs at the earliest opportunity."

According to its financial reports, Pandora pays music publishers 4.1% of revenue for the use of musical compositions, a far cry from the 55% it pays for copyright sound recordings. So while music publishing royalties aren't yet the immediate threat sound recording royalties are, no service is currently ready to take on yet more expense (including Pandora, by far webcasting's most successful). Yet that 12-to-1 ratio of what labels earn versus the publishers, and presumably the sense that a written song is as valuable a commodity as a recorded one, are seen as major drivers in the move towards publishers directly negotiating with services, and getting higher fees.

Read more in Billboard here and in Digital Music News here.