pandora

Songza ‘Casts onto TV

Wednesday, December 11, 2013 - 3:10pm

Songza updated its iOS and Android apps today, adding Chromecast capability. Google Chromecast is a thumb-sized WiFi device that plugs into a digital television’s HDMI port. when activated, Chromecast streams content from partner providers, or from anything playing on Google’s chrome browser.

The little Chromecast device has made big noise as a cheap ($35) WiFi enabler for TV sets, competing directly with Roku and Apple TV.

Songza joins Pandora among Chromecast-enabled music services, as well as Netflix and Hulu among video sites. Distributing music service to the TV might not seem intuitive, but it covers situations in which a TV room does not have any other audio system in it.

Also in Songza’s press release is an announcement of new Christmas playlists -- 75 of them, from “Classic Christmas” to “Mad Men Christmas” (the latter for when drinking many glasses of eggnog, we presume).

2013 a big year for Pandora local sales

Wednesday, December 11, 2013 - 3:10pm

Pandora is scrutinized for its usage metrics -- active listeners, listening hours, and share of market. Behind all that is the sales effort which funds the enterprise. 2013 has been a pivotal year in which Pandora built out a local sales network that resembles the revenue support systems of large media companies.

Steven Kritzman, SVP of Sales at Pandora, made that point to us in a conversation a few weeks ago. “Looking a couple of years down the road, our local/national advertising mix will look pretty similar to most major media companies.”

Pandora does not break out that mix, but the local effort is clearly outlined by the number of local sales offices and size of the local sales force. NetNewsCheck reported this week that Pandora now has 30 offices, doubling its local presence in 2013, and 250 sellers operating in city markets.

Kritzman sees the national/local balance as an equal-footed hybrid. “Both are important pieces of our business. With the scale we have now, north of 70-million people nationally every month, we are a national branding opportunity. It’s a huge piece of our business. In the last two years, our scale has gotten to a point at the local level where we are, from an audience perspective, as large as many of the biggest radio stations in any individual market. We’re getting as exciting responses locally as we did nationally.” 

Pandora recently introduced audience segmentation that goes beyond location. Ad targeting that surpasses the capability of broadcast radio is a differentiator for Pandora that is certainly part of the local sales conversation. But Pandora is not alone among Internet audio companies in pushing that advantage. The Echo Nest, a music intelligence firm that provides user-intelligence technology to hundreds of competing music services, recently released its own audience segmentation product. TargetSpot, the largest digital audio advertising network, is The Echo Nest’s first partner and client. But Jim Lucchese recently told RAIN that he regards music services as highly qualified customers.

As Pandora continues to build its local sales network, the larger story is the gold rush for advertising dollars, national and local, across broadcast and online audio. On the Internet side, precise audience targeting is a reality that has been ignited in 2013, and will doubtless accelerate in 2014.

Pandora gets you coming and going

Monday, December 9, 2013 - 12:20pm

In and out of sleep, that is.

Pandora updated its iOS app for Apple devices, adding a wake-up alarm. The app already had a timer feature that encouraged falling asleep to Pandora radio with a timed shut-off. Now users can fall asleep to Pandora, wake up to Pandora, and fortify the “hours listening” metrics Pandora publishes every month.

Pandora is biting into two competing categories with the new wake-up feature. First, obviously, clock radios and the radio stations embedded in most of them. Second, Apple’s wake-up alarm built into all iOS devices.

That built-in iOS alarm is easily controlled by Siri, which is an Apple advantage. It is a simple use-case to poke Siri in the ribs, sleepily mutter “Set the alarm for 6:00am,” slam the phone down on the nightstand, and drop directly into delta sleep. Voice control would make Pandora’s alarm a killer feature. We tried to make Siri recognize Pandora’s alarm, but she grew annoyed, and suggested setting a “reminder to call mom.” OK, we acknowledge our negligence in that area, but still wish for a voice-controlled Pandora alarm clock.

We tested the alarm by setting it one minute into the future. Oddly, Pandora warned us to plug into a power source, as if our half-full battery was gasping its last breath. Never mind that -- the alarm worked fine, gently arousing us from a 60-second reverie with a selected custom station.

You can stop the alarm or snooze it for a preset amount of time. We respectfully request an “OK” function which turns off the alarm but keeps the music playing.

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. 

Pandora shifts royalty focus away from Internet Radio Fairness Act

Tuesday, November 26, 2013 - 12:25pm

According to a report in Billboard, Pandora will no longer lobby for passage of the Internet Radio Fairness Act (IRFA). Instead, according to Billboard’s source, the Internet radio company will concentrate on the upcoming statutory royalty period, the rates for which are set by the Copyright Royalty Board. This shift of focus would re-allocate Pandora’s resources from one part of government to another, abandoning congressional solutions for arbitration and possibly market negotiation.

At stake is the cost of content for Pandora (and all digital music services), and the business conditions in which Internet radio will thrive or not. Royalty rates -- the payments to music owners for the right to broadcast or stream music recordings -- represent the wholesale cost of music. Unlike suppliers in most other industries, labels/artists (owners of recorded masters) and composers/publishers (owners of intellectual property), do not always use market negotiation to determine their prices. In the U.S., laws and arbitration processes form the basis of statutes which determine prices. Private negotiation can occur alongside that basis. 

The Internet Radio Fairness Act was introduced to address unevenness is statutory rates. Kurt Hanson, CEO of AccuRadio and Founding Editor of this site, wrote when the IRFA was introduced, “The current confusing mix of royalty-rate setting standards for digital radio is the result of piecemeal legislation enacted as each new technology was invented. The result is a system significantly out-of-sync with the realities of the 21st century marketplace.”

In the current system, cost of content differs in percentage terms across different distribution mediums. The biggest rate disparity is between broadcast radio and Internet streaming: Broadcast is not required by law to pay labels and recording artists for the use of recordings, but Internet radio is required to. This irregularity has been addressed to a limited extent by private deals between label groups, radio groups, and Internet music services.

By swiveling its spotlight from congress to the Copyright Royalty Board (CRB), Pandora is placing a new bet. Current statutory royalty rates run through 2015. Next year begins a rate-setting process for the following five-year period. For each cycle, the CRB is mandated to determine cost-of-content prices that reflect open-market realities. The difference in the upcoming cycle is that there is a more substantial open market than in previous cycles, and therefore more reference points with which to frame arguments. For example, Apple hammered out the content costs of its iTunes Radio streaming business via negotiated deal-making with music owners. Likewise, Clear Channel’s proprietary agreements with Warner Music and many smaller label groups provide open-market examples. Same with the alliance of the Cumulus radio group with Internet pureplay Rdio.

Pandora might also explore the direct-negotiation path, though it has not made private deals in the past. The company is fairly cash-rich, with about a half-billion dollars in the bank, thanks in part to a secondary stock offering completed this year. When asked about direct music licensing in last week’s earnings call, CEO Brian McAndrews replied, “[The public offering] puts us in a better position to have the right conversations."

Whatever Pandora’s future cost-management strategy, David Oxenford, author of the Broadcast Law Blog, observes that Pandora’s prioritizing is sensible: “It does make sense for all webcasters to start to focus on the CRB proceeding, as the notices of intent to participate in the next webcasting case will probably be due in January.” Oxenford also notes that we are still two years away from a decision regarding new rates, which will be announced in December, 2015, for the 2016-2020 royalty period. 

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