9/11/13: Music industry counting on iTunes Radio to be a royalty-generating machine

Paul Maloney
September 11, 2013 - 9:20am

Yesterday we extensively covered (here) Apple's iPhone event and the company's announcement that iTunes Radio will become available in the U.S. on September 18 (one week from today). While CEO Tim Cook and other presenters focused more on the new iPhones, the presentation (Apple has posted video here) did conclude with a performance by Elvis Costello, who closed with a "proto" version of his early-career classic "Radio, Radio" called "Radio Soul."

Warner Music Group EVP/Digital Strategy Stephen Bryan thinks the launch of iTunes Radio could be a real inflection point for radio's, and music's, future. He told The New York Times, "It’s a huge opportunity on a global basis to accelerate the transition of radio listeners and advertising dollars from terrestrial to digital."

Labels and publishers, writes The Times, are counting on Apple's "immense marketing power" to bring in more advertising money, and thus more royalty revenue, by becoming a leader in Internet radio in the U.S., and eventurally, around the world. (The service will launch in the U.S. only at first, but keep in mind that Apple operates iTunes Music Stores in 119 countries.)

Research firm eMarketer VP Clark Fredricksen doesn't think Apple can simply waltz in and knock Pandora off the throne in the U.S., however. "At this point Pandora is one of the leading recipients of mobile advertising revenue, and is one of the most popular apps, period, across devices," he told the paper. "It’s tough to see it getting killed."

Coverage from The New York Times is here.

Brad Hill
September 11, 2013 - 9:20am

Internet radio service Songza completed a $4.7M round of private equity funding yesterday, almost exactly two years after receiving $2M in venture funds (as reported in CrunchBase). Yesterday’s commitment will be invested in scaling Songza’s native sponsoring platform, in which advertising creative is integrated into Songza “life moments” streams. (See Billboard's reporting here.)

Internet radio advertising lags the sophisticated user targeting of the web at large. If demographic ID is a brass ring, personal targeting is a holy grail. The most rudimentary network advertising on the web can accomplish the former, while browser-cookie placement and personal profiling can deliver startlingly individualized results. Targeting technology is what makes a user’s eyes widen in astonishment (and often alarm) when an ad pops up on Facebook that reflects browsing activity on external sites just a few minutes before, refined by an understanding of the user’s personal Facebook profile.

Internet radio ads generally convey a better sense of protected privacy, but in advertising, privacy equals cluelessness and reduced value. For users who don’t have knee-jerk reactions against targeted ads, irrelevant sponsor messages that interrupt an audio stream can seem all the more intrusive and annoying for their blindness. Recent tests of iHeartRadio (video pre-roll) and Pandora mobile (display pop-ups) betray some network buying at a low value to both the user and the advertiser. (Songza runs irrelevant ads, too.)

Songza’s specialty programming offers curated music streams targeted to common life situations, day parts, environments, and moods. The categories are often smartly thought-out; one at-work channel eliminates all lyrics (good for writers). It makes sense, and might even be pioneering, to evolve ad solutions that match the “life moments” of each stream, where the curation of sponsor messaging is pertinent to the user’s real-world circumstance. And since Songza offers registration via Facebook and Google+ (standard for many sites, but not all internet listening services), and requires access to the user’s personal profile, the second crucial part of holy-grail targeting is in place.

Songza isn’t mentioned as often as Pandora, Apple, and Spotify in industry coverage. But this round of capital funding could result in distinct revenue rewards, while providing a more personalized (if snoopish) consumer experience.

Paul Maloney
September 11, 2013 - 9:20am

Studio Orca is the Brooklyn-based five-employee team behind the music programming for Chipotle's 1,400 stores, and Chris Golub its founder. Business Insider and the San Francisco Chronicle's SFGate website has published a short profile of the company.

While bits about "scouring music blogs" and attending multiple live shows a week to "scout bands" seem a bit hyperbolic (and not reflected in our listening to Chipotle's playlist), it is interesting to hear about Studio Orca's and Chipotle's philosophy behind in-store music selection.

"Unlike Internet radio stations that frequently determine song selection by genre, Studio Orca selects each song individually based its own criteria and the client," Business Insider wrote. "Tracks must fit the desired vibe of the client's space, and the studio listens for matching basslines, lyric content and recording quality of each song to ensure they pair well with each other."

Other companies in this space include Boulder, CO-based Custom Channels (the Chipotle stream is apparently hosted by Custom Channels, but we didn't find anything in the article or on Studio Orca's site regading the business relationships of these companies), FullChannel Galaxie from Rhode Island, and even SiriusXM and Pandora. Check out the piece here.

Paul Maloney
September 11, 2013 - 9:20am

Online social music service Turntable.fm announced in its blog that it is shutting down its Piki service soon.

Piki is the "more laid-back" (as the founders describe it) version of the Turntable service; "a Pandora-like, human-powered radio app combined with powerful Twitter-inspired social features," (as TechCrunch wrote when the beta launched). While Turntable listeners hear music chosen by others in "real time" (in "rooms," like listening to a DJ in person), Piki scans music hand-picked by your friends over time, and creates radio channels based on this music (with the option of listening by genre).

But Piki "just didn’t have the traction that we were hoping for, so we are closing it to fully focus on Turntable," wrote Turntable.fm founder and CEO Billy Chasen in the blog. The Next Web reports Turntable also alerted users via e-mail that the last day of service will be September 23. The company also reportedly pinned Piki's demise on lack of resources to "continue developing and maintaining" the service. It expects to launch a new version of the main Turntable service next month.

Read the Turntable blog here. More in The Next Web here.