7/12/13: Two important factors to consider in comparing Pandora, Apple streaming royalties

Paul Maloney
July 12, 2013 - 7:00am

Since the contractual terms of use for sound recordings by Apple for its forthcoming iTunes Radio became public (our coverage is here, and you can read the actual contract here), there's been a rush to determine how Apple royalties compare to those of other webcasters, like Pandora. Will song plays on iTunes Radio be more lucrative for copyright owners (and performers) than on a competitor paying the statutory rate? How do Apple's obligations truly compare to Pandora's under its "pureplay" rate?

The University of Virginia's David Touve (we've covered his analysis in RAIN before here) points out in the Rockonomic blog that these discussions fail to take into account two very important factors, both of which can significantly alter a webcaster's effective royalty rate.

Touve points out that (1) the proportion of a service's listening that comes from paying customers compared to free, ad-supported listening; and (2) how many songs listeners typically skip per hour will both impact the royalties services end up paying.

Touve's math shows that while Pandora's effective royalty is lower than Apple's for a listener who doesn't skip songs, it only takes two song skips per hour to bring them nearly equal. At just three skips per hour, Pandora is paying a higher effective rate than Apple.

Here's how. First, the "pureplay" royalty rate -- $0.0012 this year -- only covers free, ad-supported listening. Pandora pays a royalty nearly twice that -- $0.0022 in 2013 -- for songs streamed to Pandora One subscribers.

However, Apple's contract grants it either a discount, or a waiver on royalties altogether for iTunes Match subscribers! [Touve concedes he may "have misread the contract," but believes, "Apple will not owe royalties for iRadio streams to iTunes Match subscribers — even if you don’t own the track being played." It seems more likely that Apple would get an unlimited waiver only on streaming songs the iTunes Match subscribers owns in their cloud. -- Ed.] Whichever the case, Apple's obligations certainly don't go up, as Pandora's do, with subscription listening.

Taking these terms of Apple's agreement into account, Touve determines Apple will pay the contractual minimum of $0.00142 for each streamed song, or $1.42 per one thousand streams (what he calls RPM).

By proportioning paid- and free-listening, Touve calculates for Pandora an effective overall royalty rate of $0.00124 (slightly higher than the "pureplay" rate because of Pandora One listening), or $1.24 RPM. That's significantly lower than Apple's $1.42 RPM. But that's before song-skipping!

For most webcasters, the more a listener skips songs (that is, doesn't hear them, though the webcaster pays royalties for them), the higher the effective royalty rate for the songs that are played.

[Listener A hears six songs and skips two, while Listener B hears six songs and skips none. Both heard six songs, but the webcaster would have to pay for eight songs (6 + 2) for the first listener, but just six songs for the second. Thus, the effective royalty to deliver those six songs to A was higher.]

Apple, however, also gets a break on skipped songs. According to their contract, Apple won't owe for up to six songs per hour that are skipped within the first twenty seconds. (Apple also gets passes for "Listener Matched Content," "Complete-My-Album" plays, and promotional plays -- again, see the links above for our coverage of the specific terms and the contract itself).

So again, the calculations indicate that Pandora's effective royalty is lower than Apple's for a listener who doesn't skip songs. But when the song-skipping begins, Pandora's effective rate begins to climb, while Apple's holds steady. Just two song skips per hour later, they're roughly equal. At just three skips per hour, Pandora's effective rate is higher than Apple's (which, you'll remember, doesn't pay for the first six skips).

We recommend you take a look at the details in the blog and see Touve's math. It's at Rockonomic.com here.

Paul Maloney
July 12, 2013 - 7:00am

Good news for entrepreneurs trying to fund their startups. New U.S. Securities and Exchange Commission rules, according to analysis, should make that process easier, faster, and less mysterious.

Wired writes of the rules' impact of "bringing the process of funding of startups onto the internet, where it can be de-mystified, atomized, and mechanized... These effects will initially accrue to the benefit of... startups and funds that have had trouble raising money, because they’re, say, outside of traditional hubs like Silicon Valley or they’re not in hot sectors like tech."

The new SEC rules themselves are here.  

Wired also sums up analysis from other sources, like Reuters ("the rule should bring online details of even infamously opaque hedge funds, allowing for comparison shopping of the sort that was unthinkable just a year ago") and Fortune ("a robust, fast, and transparent funding machine/market would let entrepreneurs focus on running their business rather than marketing themselves to investors in the old fashioned, face to face manner").

Read more in Wired here.

Paul Maloney
July 12, 2013 - 7:00am

Adding the unique visitors of public radio KQED-FM's website over the past 30 days to the station's listening audience over the past seven days, says The Media Audit, "results in a 28.6% total unduplicated reach for the combined radio and website audiences -- the highest of any public radio station measured."

The figures come from The Media Audit's latest National Radio Format Report.

KOBP-FM has the second highest unduplicated radio/web reach, 27.4% of the Portland, OR metro. Its website alone, says The Media Audit, reaches nearly 22% of the Portland metro population monthly. This makes it tops among public radio websites. KQED's site reaches 18.5% of San Jose's metro population every month, and nearly 19% of San Francisco's.

With 19.9% of the Salt Lake City metro area's population having visited its site in the past 30 days is KBYU-FM. Adding the station's past 7-day listening audience gives KBYU a nearly 24% total unduplicated reach for the combined radio and website audiences.

See more from The Media Audit here.

Paul Maloney
July 12, 2013 - 7:00am

Radionomy has announced it is the official streaming radio partner for the Riot Fest 2013 three-city rock festival, and has launched the dedicated Riot Fest Radio.

Radionomy provides a platform for radio pros and hobbyists to create their own online radio stations for free. Its tools enable webcasters to broadcast, promote, and monetize their stations.

Riot Fest Radio features "specially curated sets" of music (dedicated to covers and remixes of Riot Fest artists' songs, for example), and will stream live from Denver during the final stop of the tour (September 21st and 22nd), with exclusive interviews and commentary from backstage.

The Radionomy-powered Riot Fest Radio is available at Radionomy.com, mobile apps like TuneIn, and at RiotFest.org. More details here.