SoundExchange seeks dismissal of SiriusXM lawsuit

Tuesday, May 8, 2012 - 11:35am

SoundExchangeSoundExchange is seeking dismissal of the lawsuit brought against it and A2IM (American Association of Independent Music) by SiriusXM in March. SiriusXM contends that the music industry organizations interferred with its attempts to secure direct licenses with rightsholders.

In SoundExchange's court documents filed yesterday, the royalty collection agency accuses SiriusXM of trying to use the courts to influence royalty negotiations. SoundExchange also argues that SiriusXM's failure to obtain direct licenses doesn't imply a "conspiracy."

You can find previous RAIN coverage of the SiriusXM lawsuit here, here and here.

Seeking Alpha has more coverage on SoundExchange's dismissal request here.

Karmazin argues consumers crave programmed content, not endless choices

Tuesday, May 8, 2012 - 11:35am

Web music philosophies"At a time when more and more content is available and consumers continue to be time-constrained, there are still only 24 hours in a day. We believe curated content... is more important than ever and will be even more important in the future as even more content becomes available especially on the Internet."

So said SiriusXM CEO Mel Karmazin recently. The quote got Digital Music News thinking, as it looked at web music services and their approaches as to music library size vs. curation.

"Others are buying that philosophy [of the importance of curation]," writes DMN, pointing primarily to Pandora. The webcaster has a music library of "just" 900,000 tracks from 90,000 artists -- "a number that has remained flat over the past few years."

On the other side of the table, there's the likes of Spotify, with millions of tracks in their libraries but relatively little curation. But Spotify's "fantasies involve curating apps," writes DMN, "not just endless spreadsheets of music."

Indeed, as RAIN has reported (here and here), Spotify and its on-demand competitor Rdio are both developing some sort of Pandora-like Internet radio service. It's not hard to see why. DMN points out that SiriusXM has 22.3 million subscribers ("roughly seven times the global subscriber base of Spotify"), while Pandora just announced they attracted more than 51 million active listeners in April 2012.

"As much as the Spotify OS needs a massive and comprehensive catalog to make this work, the future may belong to those who effectively deliver less," concludes DMN (here).

"SiriusXM is targeting the likes of Pandora and Spotify," says Billboard

Wednesday, May 2, 2012 - 11:40am

SiriusXMFor those keeping score at home, there are now at least four major music companies looking to emulate Pandora-like personalized Internet radio. The latest addition is SiriusXM. Though the satellite radio company has for years now been hinting at some kind of "personalization" features (RAIN coverage from November 2010 here), details were nowhere to be found. Until now.

CEO Mel Karmazin said during SiriusXM's earnings call that, "Late this year, we plan to debut a SiriusXM version of personalized music online, allowing subscribers to tailor their favorite SiriusXM music channels to their tastes."

The web radio stations will be available to SiriusXM's Internet radio subscribers. And they will of course be commercial-free.

"Free and freemium competitors online will have a tough time matching the commercial-free aspect of SiriusXM-branded music combined with the unique sports and talk content we offer," argued Karmazin. Clear Channel's own personalized radio service is commercial-free, while Pandora and others offer to remove commercials for paying users.

"Make no mistake, SiriusXM is targeting the likes of Pandora and Spotify," writes Billboard. "SiriusXM's entry into personalized Internet radio shows this is a very competitive space." In just the past few weeks, its bee reported that Spotify, Rdio and are also developing Pandora-like Internet radio services (RAIN coverage here, here and here).

Karmazin also took the opportunity to attack streaming radio royalty rates, which he says are "extraordinarily high." And Billboard writes (here) we can expect SiriusXM "to become even more vocal about the webcasting royalties paid by services such as Pandora and iHeartRadio."

SiriusXM is already unhappy with its current royalty rates. The company has been trying to secure direct licenses with rightsholders, thereby avoid SoundExchange and the statutory license (RAIN coverage here). Then SiriusXM sued SoundExchange and A2IM for allegedly interfering with its attempts to obtain those direct licenses (RAIN coverage here and here).

Finally, SiriusXM recently updated its Android app to include more interactive features. The upgrade allows mobile users to replay up to 5 hours of content, start songs and shows from the beginning, skip ahead and access SiriusXM's new 2.0 channel line-up. You can find out more here.

SoundExchange: SiriusXM, Pandora royalties constitute "substantially" less than 90% of total revenues

Wednesday, April 18, 2012 - 12:45pm

SoundExchangeLast week we wrote about new calculations from Live365 general counsel Angus MacDonald, which found that 90% of SoundExchange's 2011 revenue came from just SiriusXM and Pandora (RAIN coverage here).

Now SoundExchange refutes the claim, though the collection agency says they "are not able to publicly disclose the payments to SoundExchange from specific digital music services." SoundExchange argues that royalty payments from SiriusXM and Pandora made up "substantially below" 90% of their revenues. has more coverage here.

MacDonald calculated that Pandora's royalty payments alone made up 36.66% of SoundExchange's revenues. The webcaster paid "about as much in royalties for its FY 2012... as it made in TOTAL REVENUES for its previous fiscal year, FY 2011," wrote MacDonald.

Pandora paid 49.7% of its FY 2012 revenues to SoundExchange, according to its 10-K submitted to the SEC.

SiriusXM is currently suing SoundExchange and A2IM, accusing the record industry organizations of interfering with its efforts to reach direct deals with rightsholders (RAIN coverage here and here).

MacDonald: "Staggering figure" suggests Pandora, SiriusXM have "a good deal of leverage to extract a fair royalty deal"

Thursday, April 12, 2012 - 11:40am

Angus MacDonaldAccording to new analysis from Live365 general counsel Angus MacDonald (pictured), 90% of SoundExchange's 2011 revenues "came from only two sources": SiriusXM and Pandora.

MacDonald estimates SiriusXM's royalty payments to SoundExchange to be around $200 million in 2011 (based on the company's judicially-filed complaint against SoundExchange from March 23, though "a small portion" of the figure may be non-U.S. statutory payments). And Pandora's royalty payments to SoundExchange totaled $136.3 million in the 12 months that ended January 31, 2012.

SoundExchange's total 2011 revenues were $371.9 million. Combined, Pandora and SiriusXM's royalty payments make up around 90% of SoundExchange's revenues.

"That is a staggering figure," comments MacDonald, "especially if you consider all of the major and not-so-major terrestrial broadcasters who must pay royalties to SX for their simulcasts, as well as all the other types of services that pay royalties to SX... This suggests that Sirius and Pandora have a good deal of leverage to extract a fair royalty deal from SX for their respective royalty proceedings in the CRB."

SiriusXM and Pandora make up 90% of SX's revenue in 2011The finding is also noteworthy considering SiriusXM is trying to avoid paying SoundExchange by reaching its own direct licensing deals with rightsholders (RAIN coverage here). SiriusXM recently filed a lawsuit against SoundExchange and the American Association of Independent Music (A2IM), accusing the record industry organziations of interfering with its efforts to reach those direct deals (RAIN coverage here and here).

MacDonald also recently calculated (as published yesterday in Audio4Cast here) that SoundExchange's total royalty collections were up 40% from 2010 to 2011. That growth was mainly fueled by Pandora, which paid out nearly 50% of its revenues to SoundExchange in the fiscal year that ended January 31, 2012, according to MacDonald.

"Another interesting fact: Pandora paid about as much in royalties for its FY 2012 (i.e., $136.3M) as it made in TOTAL REVENUES for its previous fiscal year, FY 2011 ($137.7M).

"With Pandora’s ever-growing listening hours and royalty payments," MacDonald continues, "SoundExchange and the labels need a healthy Pandora as much as Pandora needs a reasonable Pureplay-like rate for the next royalty term (2016-2020). This is especially true if Sirius XM continues to sign up more direct license deals, thereby bypassing SoundExchange (though Sirius XM’s recent antitrust complaint suggests that may be a tough row to hoe)."

Billboard suggests ways for Net radio services to be competitive and get noticed

Friday, April 6, 2012 - 1:05pm

Internet radio is a "low-barrier-to-entry" industry. No FCC license is necessary, no huge tower in a cornfield. Get your content together, make a few phone calls, and you can be up and streaming.

The abundance of choice on this "infinite dial" is, more cynically, the result of that low barrier. How does your compelling and enjoyable Internet radio service find welcoming ears that have already been repeatedly disappointed by about a thousand of your well-intentioned by under-achieving competitors? offers some ideas for services "to separate themselves from the crowd." We love reading (and writing) about Internet radio, and we especially appreciate what it says about our industry that it's not at all unusual to see content like this in a music industry publication.

The article is concerned mostly with Pandora and its progeny: algorithm-driven recommendation/personalized playlist services. Billboard writes, "Already there is very little noticeable difference between the music most services play. Of course, these companies would certainly argue that differences exist between the ways services create personalized listening experiences. But from a listener's perspective they're all pretty similar. Over time, recommendation algorithm that generate playlists will advance to the point where one service's radio feature will be, more or less, indistinguishable from another."

The first recommendation is "create the best product." Duh. Actually, Billboard here is referring simply to the ease-of-use of services like Pandora and iHeartRadio, and it makes sense. People enjoy using a product the can easily manipulate, and that responds to them as they think it should. 

"Additional or exclusive content" can also set you apart (e.g. SiriusXM and Howard Stern; iHeartRadio and its AM/FM streams). Again, "gee, thanks!" Certainly the cost to enter the field starts to sharply rise with big-ticket contracts with personalities, artists, and pro sports leagues.

Likely more valuable is Billboard's advice to "find a hook... try being something great to a smaller number of people... some Internet radio services will need to cede the mainstream users to the larger players and find other ways to get a firm toehold in the market." This is the magic right here, where the genius shows through. The most interesting developments in Internet radio will probably happen right here: brilliant thinking leading to unique ways for listeners to enjoy the content they love.

Finally, if you "add features," you can increase the depth of your offering to listeners who might get bored with "default" settings, and be willing to put in the time and effort to take advantage of more powerful customization (Billboard mentions Slacker and Raditaz).

The "infinite dial" truly offers a space for everyone. Only a few will have the means to offer hundreds of genres of music, or the most cutting-edge technology, or top-name exclusive content -- but any webcaster can have a great idea, a unique angle, and superb execution and focus. And that draws a crowd.

Read "Business Matters: Internet Radio Services Need To Separate Themselves from the Crowd" in here.

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