9/23/13: Merged Nielsen and Arbitron may have to supply a competitor with PPM tech

Brad Hill
September 23, 2013 - 12:20pm

Selling inventory across properties and platforms is historically difficult, plagued by confusion for the buyer and heavy educational lift for the seller. Part of the challenge lies in reconciling different measurement methods. When media planners must grapple with opportunities defined partly by siloed data formats, buying naturally falls within those silos.

One potential in the Nielsen acquisition of Arbitron, approved on Friday and expected to close next Monday, is the creation of cross-platform measurement standards that will smooth over the knowledge gaps between radio, streaming, and television consumption. Ideally, agencies seeking demographic or other audience categories would view an integrated usage landscape and position their brands with greater intelligence and efficiency. On the content side, seats might be more equitably positioned around the table, given a smarter and more integrated view of audience proportions. As Tom Taylor remarked, to many stakeholders a utopian integrated market "is so close they can taste it."

The Nielsen/Arbitron merger was agreed upon in principle in April, as a $48-per-share grab worth $1.6B. Friday’s FTC approval hinges on remedies designed to solve potential competitive strangulation.

The agency’s concern is that, in eliminating competition between the two data giants, and creating a cross-platform behemoth, clients would pay more for consolidated measurement than they did when dealing with separate entities. Further, a discouraging Goliath-vs.-upstarts scenario looms large in the FTC’s consideration of this merger.

The solution requires Nielsen to provide intellectual assets and technical assistance to an FTC-approved third party -- a remedy that does more than just allow competition; it fosters it. The remedy essentially creates and nurtures a startup cross-platform competitor. (FTC PR here. Full statement here.)

The technology in question is Arbitron's Portable People Meter (PPM), currently in use by ESPN and comScore. The FTC mandate requires that licensing arrangement and product support to continue for eight years. Nielsen also clarified in this morning's conference call its obligation to license and support the PPM platform for other emerging companies.

Speaking of competition, the FTC commissioners are not speaking with a unified voice in this case. Commissioner Joshua Wright disputes the remedy, and asserts that the merger should transpire sans the competition remedies. Wright’s headline quote: “In fact, there is no commercially available national syndicated cross-platform audience measurement service today. The Commission thus challenges the proposed transaction based upon what must be acknowledged as a novel theory—that is, that the merger will substantially lessen competition in a market that does not today exist.” (FTC dissenting view here.)

Commissioner Wright’s argument aside, the FTC remedy is not inconveniencing Nielsen CEO David Calhoun’s buoyant reception of the acquisition conditions. The Nielsen chief’s public statement calls the FTC package a “highly acceptable outcome.”

Paul Maloney
September 23, 2013 - 12:20pm

Industry observers who spoke with Ad Week say don't look for iTunes Radio to decimate current leaders like Pandora and Spotify.

"Remember, even on (Apple's) own devices, Amazon Kindle books are the most read eBooks despite Apple's attempt to come in a change that business," said Forrester Research analyst James McQuivey. However, most of these experts think the competitive presence of Apple may be enough to squeeze out some smaller players.

"iTunes has a massive user base. Even if only 5 or 10 percent sign up, they are going to affect the on-demand radio stations that exist right now," said Mark Simpson, president of digital marketing firm Maxymiser. "I think we'll see a shrinkage in the number of players, while iTunes Radio grows into a significant player quite quickly."

Lauren Russo of media buyer Horizon Media sees Apple's entrance as a "win" for companies like hers. "Greater competition in the space will lead to better pricing and/or value" for ads, she said.

ABI Research predicts 294 million consumers will use Apple’s mobile iOS, updated last week with iTunes Radio "baked-in," by year’s end.

Read more in Ad Week here.

Brad Hill
September 23, 2013 - 12:20pm

Precious little information about the upcoming Beats Music streaming service is seeping out from behind the firewall, except that it will use acquired MOG assets, and might be called Daisy. Both those bits are interesting, but potentially not as intriguing as CEO Ian Rogers.

Rogers was head of Yahoo!’s music efforts in a previous corporate incarnation, before heeding the call of the startup and joining Topspin, a label- and artist-services company. He remains on the Topspin board while taking the reins at Beats Music.

If one can divine the character of a yet-to-launch service by the personality of its leader, Rogers’ blog (Fistfulayen) is a must-read. He doesn’t post often, but the updates demonstrate a sharp blend of social network critiques, family business, youthful reminiscences, and (rarely) a Beats Music hint.

Today Rogers let fly an excoriating complaint of music services that auto-share their users’ every listen to Facebook. (His gripe is understandable, though it should be pointed out that most streaming services ask for an opt-in to auto-sharing, albeit one that is embedded in the Facebook registration.) Rogers provides instructions for disconnecting those auto-shares in Pandora, Spotify, Songza, Rdio, and Rhapsody -- plus how to stop Facebook from displaying music-sharing on the receiving end. The man is on a mission.

The Beats Music hint? Here it is: “I promise you Beats Music will not do the ‘barf everything you play on Facebook’ bullshit.” If only Rogers were more plainspoken, we’d have a better understanding of how he feels. But seriously, auto-sharing should be a clear, obvious, separate and explained opt-in step in any platform’s registration process. For the sake of social sanity, we cast our vote with Ian Rogers. Now, let’s have a look at that Beats Music service.

[First spotted on Hypebot]

Paul Maloney
September 23, 2013 - 12:20pm

The New York Times writes today that one area of a troubled music industry that's seen consistent revenue growth, and may be poised for more, is songwriter and publisher royalties, collected by groups like BMI and ASCAP.

Webcasters and radio pay these groups when performing music on-air and online. These royalties are not the same as those paid to copyright owners of sound recordings.

Today BMI announced $944 million in revenue for its fiscal year ending in June, a 5% year-over-year increase, and a new all-time high.

Digital services paid BMI $57 million (which includes not only Pandora and Spotify but Hulu, Netflix, and others). While digital was just 2% of BMI domestic revenue in 2009, it's up to 9% now.

Last week (see RAIN here) a federal judge ruled publishers may not withhold certain rights from the ASCAP collective in order to wring more money out of services like Pandora. The decision does not directly affect BMI, says the paper.

BMI announced it's paid $814 million to rights holders in its recent fiscal year, also a new high. Since 2003, the paper repots, BMI's revenue has gone up about 50%.

ASCAP said in March its 2012 revenue was $942 million, down more than 4%.

Read more in The New York Times here.