RAB shows Q3 growth for broadcasters' digital revenue

Friday, November 16, 2012 - 11:00am

The Radio Advertising Bureau reports digital revenue for broadcasters was up 8% in Q3 2012, a gain of 7% for the year's first three quarters.

"Off-Air" revenues were up slightly, spot revenue was flat for the period (see chart below).

RAB President and CEO Erica Farber said, "It’s most encouraging that advertisers are taking advantage of expanding digital opportunities offered by stations... These expanding platforms afford Radio broadcasters additional avenues to bolster Radio’s growth."

Read the RAB's press release here.

Jacobs: Give ad buyers tablets loaded with radio's best apps

Tuesday, October 16, 2012 - 1:20pm

If the ad-buying community could only witness radio's achievements when it comes to mobile, certainly they'd embrace the medium much more enthusiastically. If they could only see, and interact with, the great apps for smartphones and tablets, perhaps they'd see and hear the magic that makes the vast majority of Americans tune in to radio on a daily (or at least weekly) basis.

Well, of course they can access all of this, as can anyone with a smartphone or tablet. Yet only 42% of ad professionals listened to radio during a recent one-day study, while 80% of consumers did so. And Fred Jacobs thinks this disparity could be at the root of radio getting short-changed on ad campaign buys. And, he suggests being proactive in making these ad guys aware of what radio's doing on mobile platforms.

"If the (radio) industry sits back and assumes they (ad buyers) will figure it out on their own, shame on us," writes Jacobs.

In his blog, he suggests the NAB give every key ad industry professional a tablet pre-loaded "with the very best mobile apps from some of America’s best and most diverse stations, shows, and personalities." Jacobs suggests twenty such radio apps (including Pandora, iHeartRadio, and broadcaster apps produced by Jacobs Media division jacAPPS) that show "radio belongs on the hottest devices of our time, and that the industry is leaning forward when it comes to embracing mobile."

Read Jacobs' blog here.

Free, tax-payer funded CBC Music losing millions on content acquisition, says report

Friday, October 12, 2012 - 12:35pm

According to a report, the Canadian Broadcasting Corp.'s (CBC) new streaming music service CBC Music is losing millions of dollars because of the cost of content, and lack of advertiser support.

In an article in today's Toronto Globe and Mail, the paper predicts the service, launched in February, will lose millions annually "as the high cost of content surpasses the advertising revenue the service earns."

[Find our prior CBC Music coverage here.]

CBC offers users, who pay nothing, 40 channels of streamed music, with much of the CBC's vast collection of archived music available on-demand, plus written content and videos.

While wildly popular with listeners (7.8 million visits to the site since launch, 17.6 million hours of music streamed), advertisers have been less enthusiastic. CBC expects only $750,000 in 2012 ad revenue, for a service that will cost $6 million in royalties, production, and launch expenses this year.

Those operating similar commercial operations have complained that it's unfair to compete with a service that is free to use and funded by taxpayers. Moreover, organizations like SOCAN (which represents music composers and publishers) say the volume of music CBC Music uses should make them ineligible for the "flat rate" royalty (granted to non-commerical operators) they're allowed to pay. Commerical services pay a "per-song" royalty.

"Other companies operating in the space estimate it costs about $6 a customer to run an online service, once copyright fees, infrastructure and marketing costs are considered," the paper noted.

Commercial competitors to CBC Music in Canada include Galaxie (owned by Stingray Digital and most known for its streaming music channels on pay television systems), U.S.-based on-demand streamer Rdio, satellite radio SiriusXM Canada, and U.S.-based Internet radio and on-demand service Slacker.

Read more in The Globe and Mail here

RAIN Guest Essay: "Song 2" by Andy Lipset

Tuesday, October 9, 2012 - 11:55am

Earlier in the year, I wrote an article for RAIN entitled "The Song Remains the Same" (here) which discussed how the noise around the subject of streaming was hurting potential dollars to come into the marketplace for all players in the space -- be it pureplay companies or broadcasters. 

Today, there is another wrinkle that has appeared in the space that could start to hamper dollar flow and that is one around technology. So, I have titled this article "Song 2," a follow up to my original article in January. ("Song 2" was also a big alternative rock hit in the 90’s and - somewhat appropriate to what’s happening in the marketplace -was recorded by the band Blur.)

I want to center on the debate whether or not broadcasters should stream separate commercials in their online versus over-the-air product.

There is a lot of discussion around this primarily because the ad breaks in the streams of many broadcasters sound terrible. Spots run over one another. Some spots don’t start on time. Some of the breaks finish when the over the air broadcast has already started, and spots may finish 20 seconds into the start of a song. While some have categorized the decision to discontinue running separate breaks as a royalty issue — at the heart of it, this is more of a product and, specifically, a technology, issue—and it’s one that will put a cap on money that flows into the market.

Personally, I do not believe that the broadcasters should pull their ability to insert ads into their streams. That said, the issue is an understandable one from the broadcaster’s perspective. To keep your current listeners engaged, and to attract new listeners, the stream has to sound good...

Continue reading Lipset's Guest Essay "Song 2" here.

Pandora grows its sales force by 80% year-over-year, sees 112% growth in ads delivered

Thursday, September 6, 2012 - 12:05pm

Pandora mobile adsPandora's mobile revenue will soar over the next few years, as will the whole U.S. mobile ad market, eMarketer predicts. The research firm expects Pandora's mobile earnings to swell from $120 million in 2011 to just under $500 million in 2014. (By comparison, Pandora reported more than $274 million in total revenue for fiscal year 2012.)

"On a net basis, Pandora Media has emerged as one of the strongest U.S. mobile display ad sellers, and its share of the total U.S. mobile display market is expected to reach 20.5% in 2012," says eMarketer.

Pandora announced in its fiscal results for Q2 2013 it had grown its mobile ad revenue by 86% year-over-year, reaching nearly $60 million (find RAIN's coverage here).

In fact, Pandora is currently earning far more from mobile than heavy-hitters like Twitter and Facebook, says eMarketer. That, of course, may change over the next few years, as those companies get their mobile act together. Pandora trails Google's massive mobile intake of $750 million in 2011.

Overall, eMarketer predicts (here) mobile ad revenues in the U.S. will grow to more than $6.6 billion in 2014, up from $1.45 billion in 2011.

Pandora also recently disclosed to the SEC that in Q2 2013, it saw a 112% increase in the number of ads delivered compared to the previous year. Additionally, the company has grown its sales force by 80% year-over-year. But the average price per ad declined 27%, "due in part to the mobile ad mix," reports Business Insider (here).

And of course, as we saw in Pandora's Q2 '13 results, all this growth in revenue is still being outpaced by usage and thus by staggering music royalty costs.

Despite growing revenue more than 50% year-over-year, Pandora posts a loss in Q2

Thursday, August 30, 2012 - 12:05pm

Pandora earningsPandora's revenue and active user count both grew around 50% year-over-year in Q2 of fiscal 2013, while its mobile revenue nearly doubled. But that still wasn't enough to offset growing royalty costs, which amounted to nearly 60% of the company's revenue this quarter. To combat those high costs, Pandora has stepped up lobbying efforts for more manageable rates and is striving to -- as CEO Joe Kennedy said -- "disrupt the $16 billion radio advertising market."

The webcaster's revenue for Q2 of FY13 (the three months that ended July 31) reached $101.3 million -- up 51% year-over-year. Its mobile revenue in particular grew 86% year-over-year, reaching $59.2 million. "This quarter demonstrated that our mobile monetization strategies are working," said Kennedy.

Mobile represents around 58% of Pandora's total revenue, which accounting for 75% of usage. But Kennedy says they're "narrowing that gap... That ultimately is the key to getting the content acquisition costs down," he told Billboard (here).

Pandora accumulated 3.3 billion listener hours during the quarter, a growth of 80% year-over-year. The webcaster now has 54.9 million active users (up 48%). That growth in listening means higher royalty payments.

Pandora mobileDuring Q2 FY13, Pandora paid $60.5 million -- or just under 60% of its revenue -- in royalties to the music industry. That's up 79% year-ovear-year. Royalties have accounted for 63.9% of Pandora's revenue during the first half of the fiscal year, reports the New York Times.

All told, Pandora posted a net loss of $5.4 million for the quarter. That's the "sixth quarterly loss in two years," writes NYT, which also points out Pandora lost $3.2 million during this period last year. The problem, as always, are those royalty costs. Pandora is attacking the issue on two fronts.

First, the company "has already begun lobbying in Washington over its rates" in anticipation of new royalty rate proceedings, set to begin in 2014.

Second, "Pandora has been building up local advertising sales teams around the country, and also pushing to be included in ad networks that would put its service into direct competition with terrestrial radio stations," reports NYT (here).

"Salespeople are being deployed all over the country to compete with radio for advertising dollars," writes Radio Ink (here). "In 2011 Pandora had 427 people on the payroll. That number has increased to 589 employees with the bulk of the new hires (79%) in sales."

You can find Pandora's press release here.

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