RAIN 5/29: Tech titans Pandora and Facebook share mobile monetization woes, say analysts

Michael Schmitt
May 29, 2012 - 11:10am

Pandora mobilePandora and Facebook have more than a recent IPO in common. According to some analysts, the services share the common challenge of monetizing an increasingly mobile audience.

For Pandora, mobile monetization is one of its "major challenges," argues Forbes, "just like Facebook." Analysts from Canaccord -- for example -- expect "the widening gap" between mobile usage and revenue "could pose a serious risk," reports Forbes (here). 

Facebook's mobile problem is essentially the same: fast growth, but little monetization.

In fact, an update to Facebook's IPO filing (here) states that the company "does not currently directly generate any meaningful revenue" from mobile users. That's especially troubling considering about 488 million users access Facebook's mobile services monthly, compared to a total 901 million monthly users. In other words, more than 54% of monthly users access Facebook via mobile devices.

Facebook's CFO David Ebersman said "mobile use of Facebook is critical to long-term user engagement," but argued mobile advertising is still in its early days and that there is little innovation (according to CNN, more here).

"This problem is not unique to Facebook," agreed Zoosk co-founder and co-CEO Sayan Zadeh. "No company — not even Google or Apple — has managed to figure out ad monetization on mobile to date."

Other analysts argue Pandora is figuring out how to monetize mobile users and that Facebook could benefit.

Pandora's recent fiscal results for Q1 2013 (RAIN coverage here) showed that "of the $70.6 million in advertising sales in the period, 55% stemmed from mobile devices," reports Bloomberg (here).

Facebook mobile

"We’re excited about continued progress on mobile monetization... It’s the highest percentage it has ever been," Pandora CEO Joe Kennedy said.

"If Facebook does manage to re-invent its mobile wheel and find a way to make its mobile platform profitable, expect much of the company’s inspiration to be gleaned from what Pandora has managed to achieve," comments WebProNews (here).

"Pandora's first-quarter 2013 results and conference call should help dispel myths and alleviate concerns over not only Pandora's ability to effectively monetize mobile usage, but Facebook's as well," writes The Street (here).

"Just as content providers could not ignore this phenomenon [of mobile], advertisers cannot stick with traditional channels if their target customer abandons them. So, simply put, if Pandora and Facebook users are overwhelmingly accessing the platforms via mobile environments, namely on smartphones, advertisers have little choice to make the migration."

Michael Schmitt
May 29, 2012 - 11:10am

Samsung Music HubSamsung today unveiled its new music streaming service, Music Hub, in several European markets. The service was first announced together with Samsung's new flagship Android Galaxy S III smartphone and aims to be a "holistic" service (with access via mobile, web browsers, TVs and even refriderators).

The main attraction, as it were, is on-demand music access and cloud-based storage of local tunes. Users can "match" their local music with cloud versions for free (like iTunes Match). But a paid version (about $16 per month) opens access to an on-demand library of 19 million tracks from 7Digital.

In addition to the on-demand offerings, Music Hub's paid service includes streaming radio stations. Users can reportedly create customizable stations based on artists or tracks, or listen to genre-based streams "hand-crafted by the Music Hub team." The service is likely to land in the U.S. along with the Galaxy S III soon. 

Engadget has more coverage here, as does Mashable here. Find Music Hub's homepage here.

Paul Maloney
May 29, 2012 - 11:10am

Facebook is rumored to be working on its own smartphone device, with hopes of a 2013 release.

A New York Times blog cites "employees of Facebook and several engineers who have been sought out by recruiters there, as well as people briefed on Facebook’s plans" as its source.

"For Facebook, the motivation is clear," the article reads. "As a newly public company, it must find new sources of revenue, and it fears being left behind in mobile, one of the most promising areas for growth."

Facebook reportedly already has a complete operating system built, with messaging, calendar, video, contacts, and a fully-stocked app store.

What would a Facebook phone (and mobile OS) mean for webcasters? There's building and maintaining (and marketing) yet another app. But consider the warnings to content creators that rely too heavily on powerful companies like Facebook to deliver audience. Should a Facebook mobile platform really gain traction, webcasters could potentially come to rely too much on Facebook for mobile traffic, and be at the mercy of a master with very different interests at heart.

Read The New York Times blog here.

Michael Schmitt
May 29, 2012 - 11:10am

Ford SyncFord announced at this week's Future in Review tech conference that its Sync system is now in 4 million cars in the U.S. No word on usage, though, or how that compares to to the total number of new cars Ford has sold lately.

Sync supports web radio playback from services like Pandora, iHeartRadio, TuneIn, Slacker and Stitcher via a connected smartphone. It was introduced in 2007. You can find more RAIN coverage of Ford's Sync system here, here and here. Engadget has more coverage of today's news here.