A Story

RADIO LEGEND LEE ABRAMS INSPIRES ATTENDEES TO REINVENT THEIR APPROACH TO RADIO, NEW MEDIA

Kurt Hanson speaking at RAIN Summit Midwest 2011
Monday, July 18, 2011 - 1:05pm

The 36th annual Conclave was three days of intense learning and networking, and those who persevered for the finale on Saturday heard expert insight at RAIN Summit Midwest about radio’s online future. In spite of some challenging weather on Friday, the Summit was a big success and RAIN would like to thank all speakers, panelists, sponsors and attendees. The afternoon featured engaging and thought-provoking discussions, not least of which was Lee Abrams’ keynote presentation.

RAIN has moved!

Wednesday, December 11, 2013 - 3:10pm

RAIN has moved!

CLICK HERE to enter the new site, RAIN News. (www.rainnews.com)

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So what’s going on, anyway? READ OUR PRESS RELEASE HERE.

The RAIN mission remains the same: to be the leading source of information about the future of radio and online audio. The new RAIN experience will be more dynamic, engaging, and conversational. We think you’ll love the new site.

Thank you for reading RAIN, and welcome to our new era.

Coming Wednesday: A new RAIN site!

Monday, December 9, 2013 - 12:20pm

On Wednesday of this week, RAIN will move to a new and redesigned website! The new RAIN experience will be more dynamic, engaging, and conversational. The RAIN mission remains the same: to be the leading source of information about the future of radio and online audio. We think you’ll love the new site. Watch this space for a link to the new site on Wednesday.

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Thank you for reading RAIN, and welcome (in advance) to a new era … starting Wednesday!

And now, onward to today's news.

Why Spotify’s upcoming announcement matters

Friday, December 6, 2013 - 12:35pm

Spotify will announce free mobile access to its listening platform, according to the Wall Street Journal, citing anonymous sources. If true (we think it is), the announcement will probably be part of a Spotify media event in New York on Wednesday of next week. Spotify distributed mystery press invitations to the event earlier this week, Apple-style, with no agenda or purpose disclosed.

The news might be puzzling to some observers. Isn’t Spotify already a mobile service, in addition to its desktop-bound computer application? 

Yes, Spotify apps can be downloaded by anyone, whether or not they subscribe to Spotify’s service. But free use of the mobile app is restricted to the “radio” feature. Spotify is also a jukebox service providing random access to tracks, albums, and user-created playlists. The whole shebang is available free of charge on computer desktops, supported by ads. Subscribing to Spotify ($10/month in the U.S.) cleans out the ads and opens up the entire platform (including song downloading) to smartphone and tablet use. 

Assuming the leak is true, there are a few significant dimensions to Spotify’s decision.

Erasing the difference between mobile and desktop

This is the aspect with the most far-reaching consequences for all stakeholders -- music services, music owners, and consumers. For years, mobile has been regarded as a separate usage realm, existing alongside normal computing, and exceptional. Increasingly, That view of usage has shifted out of alignment with lifestyle realities.

RAIN spoke with music-tech entrepreneur Michael Robertson earlier this year about the separation of mobile use in music business models. Robertson, whose latest project is the Radio Search Engine (RAIN review here), took the consumer’s viewpoint:

“One of the big hurdles has been the industry's view that mobile is different than desktop. Spotify, Rdio, Xbox Music -- these have most every song in the modern library. On the PC it's free with ads, but when it comes to mobile, you've got to get out your credit card. That has stunted access. People wonder whether they really have access. When there is an arbitrary decision about delivery on a PC but not on a tablet, people think, ‘Maybe I don't really own this.’” 

Consumers are leading the “mobile-first” revolution sweeping through Internet content of all sorts. Spotify’s decision to open up mobile (to some extent, not yet known) would ratify a growing mainstream reality that the smartphone is the consumer’s leading digital device. The boundary between desktop and mobile is increasingly artificial and hostile to users.

Turning on new revenue

To whatever extent this course change reflects new mobile ad inventory, Generating more mobile usage traffic will generate more ad revenue. That doesn’t necessarily mean a profitable mobile operation, of course.

The other side of Spotify’s business is the paid subscription tier. Withholding most of the platform’s features in the past was intended to drive free desktop users into the paid subscription service. But that style of coercive induction has become bizarre and off-putting to consumers in a music-access world with more choices than ever before. Speaking of choices--

Competitive positioning

Spotify has leadership position against Rhapsody and Rdio, its most direct U.S. antagonists, when it comes to audience size and brand sway. But as online streaming flows into general awareness, the user population is less able to distinguish fine points of service features -- and uninterested in doing so. To some extent, “Internet music” today simply means finding the most convenient Play button and clicking/tapping it. In that context, Pandora is every bit as directly competitive, even though it offers a substantially different feature set.

Looking ahead, the waters will get choppier, and the competitive atmosphere more strangling. It is nearly certain that YouTube, Deezer, and Beats Music will launch highly publicized, attention-grabbing U.S. listening platforms in early 2014. (Beats Music is a certainty for January.)

In anticipation of a more crowded field, now is the time (arguably past time) for Spotify to fortify its brand by opening the doors wider, both to get existing users more involved in the ecosystem, and to give new users a rounded view of its features.

Pandora CFO on ratings, ad sales, and subscriptions

Thursday, December 5, 2013 - 12:10pm

Pandora CFO Mike Herring addressed the Credit Suisse 2013 Technology Conference this week. The format was a moderated Q&A session. We pulled out three subjects within which Herring’s responses were of particular interest: ratings measurement, how Pandora sells ads, and its hybrid subscription/advertising revenue model.

On the subject of ratings, Herring pushed Pandora’s agenda of inclusion in traditional radio measurements developed by Arbitron (now Nielsen Audio). His talking points echoed what CEO Brian McAndrews said in Pandora’s recent quarterly earning teleconference, and we expect the company to continue hammering away on this issue. Currently Pandora releases a proprietary “share of total U.S. listening” metric every month, a number that disputed by some broadcast executives.

HERRING: “You mentioned Arbitron, they currently don’t measure streaming services like Pandora. Now that they’ve been acquired by Nielsen, conversations are ongoing. We’re optimistic that they’ll embrace the future [by] allowing us to be measured alongside broadcast radio. That’s what we’ve always wanted. Our release of monthly metrics are really about trying to put a stake in the ground about how we’re measured, how we stand up next to the competitors we have in the market for advertising dollars. We’d love to have that measure, [to be put] side by side within the Arbitron system.” 

Herring addressed a question about the rise of programmatic ad-buying, and how Pandora’s large-scale build-out of a sales network fits into the automation trend. Herring’s answer acknowledged the importance of both sides, and defends the future of personal selling.

HERRING: “So, you really have to think about it in two buckets. So, the audio side of the business or the broadcast side -- $15 billion in radio is really a consultative sale. You are [personally] pitching buyers on the value of your audience I don’t see that becoming an automated platform soon.” “We hear a lot about programmatic buying [...] on the digital side of things. And Pandora is going to be right alongside the leaders in that space in developing capabilities there. But on the audio side there will always be a feet on the street. You are out pitching agencies [which is] why we put people in 29 local markets last year to really pitch local radio advertisers.”

Herring addressed paid music and free music. When there is a steady focus on the subscriber number -- how many Pandora listeners pay a monthly fee to remove advertising -- analysts often must be reminded how Pandora prioritizes and balances the two sides of its business. In his reply, Herring valued subscriptions, but emphasized the advertising side of the revenue equation.

“[We] got to 3.18 million subscribers at the end of the last quarter. It’s a great business [which is] 20% of revenue. But at Pandora we fundamentally believe the big opportunity is not the 20% of people in the United States that are willing to pay for music. And there are a lot of streaming services that are fighting to get a piece of that market. We have a piece of it as an adjunct to our free business. We also have 67-69 million people who have grown up believing that music listening should be a free experience. They’re willing to listen to advertising associated with that. We think that’s a much bigger addressable market and that’s why we focus so much time on that. The subscription business will always be an important part of our business but not the main growth driver long term.”

Pandora’s audience metrics show growth across the board

Wednesday, December 4, 2013 - 11:00am

Pandora released its three-point Audience Metrics report for November this morning. The statistics reveal month-over-month growth in each category.

The most scrutinized part of Pandora’s monthly measurement drumbeat is the Active Listeners statistic. That number has received especially obsessive attention since mid-September when iTunes Radio launched. The two Internet radio platforms are widely regarded as direct competitors, pitting a pioneering indie (Pandora) against a richly resourced tech behemoth (Apple).

The good news for anyone bullish on Pandora is that the company regained most of the active listeners that it lost in October. Brian McAndrews, CEO, attributed the October dip to iTunes Radio tire-kicking in a recent earnings call, and he predicted the number would recover in November. The McAndrews Stabilization Theory seems to be proved out in today’s report. November ended with 72.4-million active listeners, up from 70.9-million in October, and compared to 72.7-million in September.

“Bullish” is the right word, as a quick look at Wall Street shows P stock apparently responding to the report with a sharp 5% gain at mid-day.

The obvious near-term conclusion within the Apple-vs.-Pandora framework, is that iTunes Radio is not the Pandora-killer that many predicted. Of course, competitive standings can change in the longer term.

Pandora’s listener hours increased slightly from October’s 1.47-billion to 1.49-billion in November. (Up from 1.36-billion in September.)

The controversial “Share of total U.S.radio listening” metric showed continued penetration growth. November’s share was 8.44 percent of total listening, up from 8.06% in October and 7.77% in September. That proprietary measurement has weathered criticism from radio groups which claim it should be cut roughly in half. (As Jennifer Lane points out, that would still be a huge share.) There is no integrated measurement system that includes Pandora listening with broadcast listening. In the recent earnings call, McAndrews wished for that situation to change, and stated that Nielsen Audio (formerly Arbitron) wished for an integrated solution also. 

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