investment

Billboard writer encourages backing dedicated Net radio services: "So much potential exists"

Friday, May 31, 2013 - 12:35pm

Earlier this week came news of a milestone listening mark, $25 million in new capital, and a new CFO for TuneIn, the Internet radio tuning and aggregation service and makers of one of Net radio's most popular mobile apps (our coverage is here).

The San Jose Mercury News points out (here) one of the investors is Google Ventures. That Google, the one that just launched their own streaming music service (more here). That new CFO, Axel Martinez, by the way, is from Google. Martinez was Google's assistant treasurer and took part in managing Google's investments.

The Mercury News also suggests that hiring a CFO can be taken as a sign of a company's intention to go public. Institutional Venture Partners, which led the funding, calls it a "late stage" fund "that typically invests in a company once it's closer to a potential IPO," the paper wrote.

Whether TuneIn becomes the field's second public Internet radio company (after Pandora), columnist Glenn Peoples at Billboard says the investment is a "good sign for radio" and "confirms the appeal of traditional radio while bolstering the notion the traditional radio market is ripe for disruption."

The service announced listeners had streamed over a billion hours of content in the year's first four months. While TuneIn (and Pandora, for that matter) still represents just a sliver of worldwide radio listening, these figures "are clear evidence that consumers enjoy radio in an easy-to-use mobile app or web-based service," Peoples wrote. "Investors should continue to put money into the Internet radio space because so much potential exists."

Mentioning Apple's anticipated entry into Internet radio as a possibility, he concludes, "A huge, global market is just waiting to be disrupted by companies that focus only on Internet radio." Read more in Billboard here.

Songza tells press it has "significantly more" than 2 million active listeners

Tuesday, April 16, 2013 - 3:20pm

Webcaster Songza now has $3.8 million more to build their business, following their latest round of funding. TechCrunch reported Sunday on the relevant SEC filing, and that Amazon is an "unconfirmed investor."

Songza is the service that offers different channels of music based on listeners' activities, moods, and time of day (a feature that Clear Channel pretty much copied with its "Perfect For" iHeartRadio feature it added in January). The service was launched by the team behind AmieStreet.com ("crowd-priced" MP3s), of which Amazon was an investor. 

Billboard says last June Pandora stocks "dropped 11.2% over two trading days shedding some $208 million of market value after BTIG analyst Richard Greenfield warned in a blog post that Pandora investors should be worried by the sudden rise of Songza." By July, Songza reportedly had 2 million active listeners, but CEO/cofounder Elias Roman tells Billboard that number is now significantly higher.

In August, investors put $1.5 million into Songza. Other recent successful webcaster investment rounds (from Billboard) include Earbits, Radical.fm, Senzari ($3 million), and TuneIn ($16 million).

Read more from TechCrunch here. The SEC document is here. Here's Billboard's coverage.

2012 was a big year for funding operations like Sonos, Deezer, and Spotify

Wednesday, January 23, 2013 - 12:50pm

New figures say venture capital backing music operations soared 34%, to roughly $621 million, in 2012 (as calculated by Digital Music News). That's in a year in which total cross-sector financing fell 10% (to $26.5 billion). Sonos, Deezer, and Spotify each attracted more than $100 million last year (see chart). 

A quick glance at the numbers above shows just how small a drop in the bucket of venture capital music financing is. Far larger sectors include software, biotech, industrial, medical, and IT services.

The cross-sector data comes from PricewaterhouseCoopers, Thomson Reuters, and the National Venture Capital Association (NVCA). 

More, including the chart, is at Digital Music News here.

Jelli secures $9M in funds; listening and ad impressions surge

Wednesday, October 3, 2012 - 6:45pm

Jelli announced yesterday the closing of a $9 million funding round.

Additionally, the company announced a 250% increase in listeners over the past year, to approximately 2 million listeners per month (via more than 70 U.S. affiliates). Total ad impressions served by the Jelli Platform also went up more than 500% in the past year, topping 60 million per month.

"Jelli is a social radio platform that combines group listening with game mechanics... Listeners take over the broadcast by voting for the songs they want to hear in real-time. Listeners engage with other users in live chat rooms and through Facebook. Jelli's cloud-based platform broadcasts this user-controlled programming in realtime on air on terrestrial FM radio stations across the United States. Jelli's platform also serves terrestrial radio spots on air."

The company says the new funding will go towards product development and sales growth. The round was led by new investors Intel Capital and Relay Ventures (which have received seats on the company's board of directors), with participation from existing investor First Round Capital and individual investors including Roger Ames, former chairman of EMI Music.

Coady Diemar says royalty, scalability issues hamper AM/FM growth online

Wednesday, August 1, 2012 - 12:30pm

Investment banking group Coady Diemar Partners released a report today in which they suggest the prohibitive cost of streaming sound recording royalties, coupled with programming that doesn't translate well to the Internet, has led to radio's passive approach to pursuing an online audience.

A quick glance at Triton Webcast Metrics ratings (see a graph here) shows little positive growth for most terrestrial radio's online listening. The Coady Diemar report shows only 8 of 14 terrestrial broadcast companies posting online listening gains from May 2011-May 2012. The investment bankers suggest it's broadcasters' content (simulcasts with "8-12 minutes of commercial time" and lack of customization features) and "lack of scale" (it's not likely for most local radio stations to build Internet-sized audiences) that keep audience growth, and thus profitability, down.

Internet radio listening trends

Pandora, however, has used its advantages as a web-only service (customization features and the ability to build a national brand) for "phenomenal growth in reach and time-spent listening... According to Triton Webcast Metrics, Pandora’s listening in June 2012 accounted for approximately 5.98% of all radio listening, up from 3.37% of listening in June 2011... In fact, since September 2010 in any given month Pandora has captured between 78%-95% of the incremental internet listening."

So Pandora's created a huge online audience, but they face the same royalty hurdle as broadcasters. Despite an explosion of usage, Pandora's royalty obligation prevents them from being profitable. "We believe this lack of profitability is a major reason why terrestrial radio operators have not been more aggressive in marketing and promoting their online streams," reads the report.

"Venture capital firms continued to invest in Internet radio or digital music opportunities in the last year," writes Coady Diemar director Chris Ensley, despite a "lack of profitability" for companies like Pandora due in part to high royalty rates. But "most terrestrial radio companies, many of whom have public shareholders, were not in a position to incur" the type of losses associated with getting started in web radio. In Pandora's case, that totalled "$82 million in operating losses over the last six years."

AM/FM online listening flatlining or dropping for most

Those who've followed the Internet radio space since its inception will remember the industry's bewilderment at potential royalty bills amounting to many multiples of what any service was making at the time. How could something so one-sided in favor of the recording industry as the Digital Millennium Copyright Act -- which (largely) birthed the obligation for webcasters to pay for sound recording copyrights, at rates determined by the CARP (Copyright Arbitration Royalty Panel, now replaced by the CRB) -- have been passed? In 1998 there was no Internet radio industry to speak of to fight it. Had the NAB been "asleep at the wheel?"

The legend grew that broadcasters at the time weren't too worried about high online royalties. They served as a barrier to new media competition. And what did online streaming -- where audiences, and thus ad revenue, were miniscule -- have to do with end-of-the-quarter goals anyway? Radio certainly was in no position to spend $82 million and six years to find out.

As it turned out, of course, high royalties did not prevent the rise of Pandora and Slacker, nor has it prevented terrestrial radio's (still moderate) listening declines. It's also true now that broadcasters like Clear Channel recognize the importance of the Internet and see radio's gradual shift from "local over-the-air" to a market of audio content producers operating on all platforms.

In fact, Clear Channel and its iHeartRadio web and mobile platform are growing well. Ensley credits the company for being "aggressive in promoting iHeartRadio." Clear Channel has also sought clever ways of reducing the costs of streaming, like its new agreement with Big Machine (RAIN coverage here).

Coady Diemar Partners

"By combining its promotional prowess with a more satisfactory online royalty rate, Clear Channel should be able to reduce operating losses while increasing the speed at which iHeartRadio reaches profitability."

Indeed, Clear Channel and iHeartRadio may then be AM/FM's best hope, Ensley writes, especially when it comes to future car dashboards. "No radio station group on its own is likely to be able to compete with Pandora when it comes to being in dashboard on future car models." But by joining services like iHeartRadio or TuneIn, "radio companies can ensure they have a compelling service to compete with newer in-car/in-dashboard services such as XM Satellite and Pandora."

You can find the report from Coady Diemar Partners here.

iHeartRadio-powering Echo Nest raises $17m for international expansion

Friday, July 13, 2012 - 12:00pm

The Echo NestThe Echo Nest -- the music data service that powers companies like iHeartRadio, Spotify, eMusic, VEVO, MOG and others -- has raised $17 million in a new round of financing. "The round brings Echo Nest’s total funding to just over $27 million, making it one of the most-funded music data companies out there," reports TechCrunch.

Echo Nest CEO Jim Lucchese says the new investment will help the company focus on global expansion. They've seen "a big spike in inbound interest from international developers and music companies, particularly in South American and Eastern Europe."

TechCrunch has more coverage here.

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