itunes radio

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 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. 

Veteran broadcast sales exec reportedly departing for iTunes Radio

Monday, December 2, 2013 - 12:15pm

Tom Taylor’s NOW newsletter reports that Mike Pallad, EVP of Sales at Cumulus Media, is leaving Cumulus for iTunes Radio. Taylor’s blurb cites an internal call to Cumulus managers. As of this writing there is no official announcement or press release, but a RAIN source affirms the news.

Mike Pallad is deeply groomed and accomplished in broadcast, and his reported move to Apple, a giant tech company with a music outlet, is an indication of of the substance, seriousness, and scale of the advertising efforts at the major pureplays.

Pallad’s resume tells a story of executive ascension at Cumulus, Citadel Broadcasting before that, the Katz Media Group, and Emmis Communications. He has held positions ranging from sales manager of WQCD-FM (a New York smooth jazz station), to regional sales management, to head of all sales at Cumulus.

Pandora equal to FM in Millennial listener survey

Friday, November 22, 2013 - 8:25am

This week Mark Kassof has been releasing installments of his ListenerThink study, in which Millennial listeners were asked to rank their sentiment toward FM, AM, and a selection of Internet music services. Pandora and FM came through with the rosiest scores. Respondents favored them equally, according to an index score developed by Kassoff.

Survey participants were asked to rank their feelings about each included listening mode as Love, Like, Dislike, Hate, indifference, or unawareness. Kassof breaks out the percentage of each response across the sample, and you can see the results on the blog. The top ranking (Love) was bestowed on Pandora by 39 percent of respondents, compared to 37 percent for FM.

We find it interesting to look at Love and Like combined, as a generally favorable Love/Like score. Through that lens, FM dominated the results with 82 percent, Pandora got a strong 65 percent, and iTunes Radio settled at 42 percent. 

That's a distorted view, though, both because it ignores other responses, and because familiarity with FM is higher than any of the Internet platforms. Kassof solves the irregularities with a mean score of all rankings, eliminating respondents who were unfamiliar with the listening mode. In that view, Pandora and FM came through with score

Streaming continues to erode “album release” concept

Friday, November 15, 2013 - 12:05pm

We noticed the new Hunger Games soundtrack album as a streaming playlist in iTunes Radio, which supported our repeated observation that “album release” no longer has much meaning.

In the years when radio was the only mass-market music discovery venue, and the only hitmaker, pre-release singles effectively promoted albums, sometimes weeks before album availability. Streaming puts a new slant on album promotion. We noted that in the cases of Justin Timberlake and Eminem, iTunes Radio streaming previews effectively released the albums in a viable listening format before the CD and album download were available. In both cases, those albums shot to the top spot in Apple’s iTunes album-sales chart. More correlation (Billboard) of the strategy’s effectiveness lies in the fact that the Timberlake product headlined the best album sales week of the year, and Eminem’s spearheaded the second-best week.

Coincidentally, as we were listening to a Songza playlist, a track from the Hunger Games album popped in. That opened our eyes to the fact that the iTunes Radio promo is not an exclusive deal. And Rolling Stone notes that some of the artists included in the album compilation have (pre)-released tracks or snippets. It’s natural that a multi-artist album would demonstrate a more ragged introduction than one band with verticalized management. But the overall point is that Internet radio, plus other leakage points, make album release dates increasingly meaningless lines in the sand when the tide is rolling in. (We love a good metaphor.) 

At this writing, the Hunger Games album is perched at the top of the iTunes pre-order chart, and is placed at #22 in the total album-sales list. The album’s formal release date (which, again, is becoming more a marketing slogan than an actual availability milestone) is next Tuesday.

The push-pull relationship of streaming and albums

Wednesday, November 6, 2013 - 12:15pm

Can streaming music help album sales?

Last week’s SoundScan charted the lowest number of single-week album sales since 1991, when that measurement started informing Billboard charts, and there was immediate apocalyptic talk that streaming killed the album.

Pessimism might be justified when it comes to the album’s product legitimacy in 2013 and beyond. Bob Lefsetz applies his characteristically blunt futurism to the topic in a reaction to weak sales performance of Katy Perry’s new Prism collection.

Streaming music is not the cause of declining album sales, although it does reflect and support changing consumer demands and expectations. Consumer choice has been evolving for 15 years. Whether that marketplace shift is blindingly sudden or laboriously slow depends on whether your clock is set to Internet time or normal-world time.

The album suffered its first collision with digital reality when the mp3 format was unleashed, along with corresponding computer apps that enabled recording CD tracks. The term “ripping” resonated with illegality (“ripping off”), but copying tracks to mp3 files was just a legal as copying them to cassette tape.

It was the widespread sharing of mp3 tracks that was legally problematic. Sharing mix tapes on cassette was illegal, too, but so cumbersome and one-to-one that nobody much cared. When the original Napster hit the net in 1999, a one-to-many file-sharing revolution occurred. Horrified record labels complained that they couldn’t compete with free music, an obvious though arguable point, but two other values made Napster popular: a long tail of music unavailable elsewhere, and tracks separated from albums.

The iTunes Music Store rescued labels by wrapping a commerce solution around some Napster attractions. Doing so demystified and sanctioned single-track consumption. Steve Jobs had to talk the labels into breaking apart their albums for sale, and gave them digital rights management (DRM) in exchange, at least temporarily -- mostly solving the copy problem for iTunes-purchased tracks.

Music as e-commerce was off and running, but the album was a seriously broken product by 2003. A CNN Money article in 2010 reported skidding album sales in nine of the decade’s ten years.

Streaming music was operating in various forms before iTunes Music Store launched, including webcasts (AM/FM and pureplay), eMusic (subscription to download) and Rhapsody (subscription to stream). The combination of all these forces -- unauthorized file-sharing, iTunes price-per-download, subscription jukeboxes -- ushered the playlist era, a mix-your-own-album type of music consumption. Music became increasingly granular, smashed from album boulders into playlist gravel.

The mobile computing revolution, which started with laptops and accelerated with smartphones, furthered the trend. As cell phone data speeds increased in rapid technology cycles, the concept of accessing music from anywhere became viable for an enlarging class of well-equipped consumers.

Something else happened: a new streaming business framework based on advertising unlocked the “celestial jukebox” to people unwilling to pay for a music subscription. Spotify, Rdio, and their ilk offered an easy, no-charge on ramp to the so-called access model, where music exists as an always-on cloud of content available anywhere, synchronized across personal technology devices.

More than just granular, music has become atomized. The musicians’ complaint is that atoms of music consumption don’t pay as well as selling the big rocks (albums) or little rocks (price-per-track). The streaming industry’s response is that the liquification of music is still in early days, and when streams become tidal, everyone will prosper.

Recent experiments in iTunes Radio indicate that streaming access can stimulate old-world music purchase habits. iTunes Radio streamed Eminem’s new album for week before its release as a download or disc. The service did something similar with Justin Timberlake’s latest release; we noted then that “album release date” had taken a new, more liquid definition. We also noted that Timberlake’s album was perched atop the iTunes Store album-sales chart, while its individual tracks were far down the singles chart.

Whether streaming is driving album purchases is difficult to determine, but there does appear to be correlation of iTunes Radio pre-release streaming and iTunes Store chart performance. The Eminem experiment seems to be producing the same effect. The album’s pre-sales have propelled it to the #1 chart position. At the same time (either connected to pre-release streaming or not), Billboard reports that the Eminem album will start its Billboard 200 life in the top slot, and notch the second-highest album-sales week of the year.

So, while general music streaming might not support album sales, targeted promotional streaming on a major platform might funnel users who still enjoy outright ownership into traditional music stores. Especially when, as with Apple, the streaming service sits side-by-side with the music store.

Pandora’s October audience metrics vs. the recent study of iTunes Radio threat

Tuesday, November 5, 2013 - 11:50am

Pandora released disclosed its audience metrics for October last night (see RAIN coverage here). The much-watched measurement of “active listeners” slipped 2.5% from September, from 72.7-million to 70.9-million. That metric is significant for the first full month in which Pandora and iTunes Radio operated concurrently. We wanted to circle back with Michael Graham of Cannacord Genuity, who authored a study of the near-term threat that iTunes Radio posed to Pandora. (See our original interview here.) Graham predicted that Pandora risked losing one percent of its listeners to iTunes Radio.

This morning we asked Graham how the just-released October numbers match up with the research prediction. His response: 

We were a little surprised by how many active listeners we lost, but were also surprised by how strong the listening hours were. The drop-off in listeners is more than we estimated might happen. The part we didn’t predict is this: [Pandora] lost a large number of low-engagement iOS users who, we believe, were added more recently, then decided to try iTunes Radio. We believe this because the average number of hours per active listener expanded sharply, from 18.8 during September to 20.5 during October. Part of that can be explained by the listener cap on mobile coming off. But the bigger part is likely that the listeners who went over to iTunes Radio were low-hours listeners. We believe that the overall number of listening hours is in good shape."

A research note from Cannacord Genuity in response to Pandora’s metrics also mentions non-iOS Pandora use: “We are somewhat surprised at the 1.8 million sequential decline in active listeners. That said, we believe growth from Android listeners was strong, and we believe the company may be seeing some stabilization on the iOS side already.”

(Graham is an analyst for the investment firm Cannacord Genuity, and he discloses that the company is bullish on Pandora. Research on this topic supports the company’s Buy recommendation.)

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