The Twitter Approach To Streaming Songs
While rumors of a streaming music service from Apple and Google have been prevalent lately, few expected the announcement last week that Twitter is developing a mobile music application that will let its users play and share songs. Last year, Twitter acquired the music recommendation website We Are Hunted, a site that charts the 99 most popular songs on a daily basis by tracking what the web has to say. It was a perfect match for Twitter, since it was a music discovery site already built to keep track of what music listeners were talking about and sharing on Twitter and other sources.
The new app, called Twitter Music, could launch by the end of this month. Various reports say that Twitter Music will suggest artists and songs, based at least in part on what a person follows on Twitter. Songs will be streamed via SoundCloud, which seems to be a perfect streaming partner. It’s easy to imagine the success that an application like this can have, given the popularity that lots of recording artists have on Twitter. Artists can offer their music on SoundCloud and spread the word on Twitter directly to followers.
Probably not coincidentally, SoundCloud has revamped its fee structure, making it easier for artists to open accounts and offer their music easily to fans. An enhanced Pro subscription also offers the ability to run ads, which they call “Moving Sounds.” Based in Berlin, SoundCloud has over 180 million users per month. It’s one very interesting streaming platform that is more focused on delivering quick hits – like songs and soundbites, than longer, radio station like experiences. Which is of course, entirely compatible with the way online consumers like it, on Twitter and Facebook, Instagram and Tumblr…
By the way, SoundCloud execs participate often in RAIN Summits, and we’ll be hosting one in Vegas on April 7th, and Brussels on May 23rd.
Streaming’s Top Songs Chart
In a nod to the increasing share of music that is getting listened to via streaming platforms, Billboard has added a Streaming Songs Chart to its weekly listings. Last spring Billboard started charting top songs played by On Demand services, this list will cover those and add the songs played most by streaming services. Macklemore & Ryan Lewis holds the top spot on Streaming Songs with 1.45 million total streams in the U.S. Services included in the reporting are “such services as Spotify, Muve, Slacker, Rhapsody, Rdio, MySpace, Xbox Music and Guvera.”
The data comes from Nielsen Soundscan and Nielsen BDS data - Nielsen SoundScan measures U.S. point-of-sale of recorded music product. Nielsen BDS tracks U.S. radio airplay and music streams. Both systems power many of the Billboard charts. Nielsen recently reported that music purchases are at an all time high, up 3.1% over last year, driven by digital sales. For 2012, sales of albums and track equivalents are down slightly at -1.8% vs. 2011. Digital Albums are up 14% and Digital Tracks are up 5%. CD sales declined 13%.
Pandora meanwhile has posted a recap of sorts of last year on its blog, noting that last year listeners to Pandora created 1.6 billion stations and listened to more than a million different songs by 100,000 different artists. I’m thinking that data is probably at least as deep in terms of sample size as the stuff Nielsen is collecting…
Taylor Swift’s Break Up With Spotify
An article in the New York Post last week notes that Taylor Swift’s new album Red is not available for on-demand listening on streaming services like Spotify, Rdio and Rhapsody. This is a strategy that other artists have used as well – Adele and Coldplay both held off making their new albums available on similar services. While it’s a leap to say that the strategy was the reason that the album had the best sales in its first weeks of any non-discounted album in the last decade, it’s reasonable to conclude that it didn’t hurt.
Streaming is growing in popularity and record sales are dropping. Some artists and their companies are seeing a relationship between the two and concluding that making their new releases available on these services is bad for song sales. Unfortunately, the amounts that they get paid by the services when listeners listen to their music doesn’t compare.
Ironically, Swift didn’t see fit to hold her album back from airplay on broadcast radio. A deal earlier this year means that she’s actually getting compensated to some degree by some big broadcast companies including Clear Channel when her songs play on the radio. While that probably doesn’t amount to much, it’s forging a new relationship between recording artists and radio.
It’s important to note that it’s the on-demand services that are getting shunned by Swift and others – Pandora has the album, as does iHeartRadio and other services that don’t enable listener to build playlists and request music by song, artist, album, etc.. There’s a growing perception that those services are being used as music collections and replacing song sales.
It may well be that artists, especially the big names, will continue to hold back their albums from services like Spotify for a while as part of their launch strategies. Or the services may find a way to be more relevant to those artists in their early song sales days, by providing data, promotion, sales support, in an effort to get back together again…
Study: Pandora Boosts Music Discovery But Not Song Sales
Internet radio services such as Pandora are increasingly important platforms for new music discovery, according to a report released by NPD Group last week. The study also found that listening to Internet radio – 27% over last year, while listening to on-demand streaming music platforms is up 18%.
As Internet radio and on-demand listening has risen, the number of consumers who reported listening to music on CDs dropped 16 percent, while the music audience for AM/FM radio fell 4 percent, and the number of consumers listening to digital downloads declined 2 percent.
“Although AM/FM radio remains America’s favorite music-listening choice, the basket of Internet radio and streaming services that are available today have, on the whole, replaced CDs for second place,” said Russ Crupnick, senior vice president of industry analysis at NPD. “We expect this pattern to continue, as consumers become more comfortable with ownership defined as a playlist, rather than as a physical CD or digital file.”
96 million Internet users listened to Internet radio or an on-demand service in the past three months. In an interesting chart of usage rates of Pandora listeners to other music sources such as AM/FM, CDs, and digital music files on computers, the report shows that Pandora listeners listen less to all of those over time, but continue to listen to AM/FM more than the others.
Women Like Listening Online
Women like streaming music on the Internet, and are doing it more than they were a year ago, according to a new study by Alan Burns and Associates. The new study focuses on women’s usage and attitudes toward radio, among women 15-54 who listen to Adult Contemporary and Top 40 formats. The findings tell the story of the on-going shift online. Indicators of that trend include listening to streaming music up 15.8% over a year ago, and nearly 40% in total agreement with the statement that “Radio is kind of old, online music is hot now.”
On a daily basis more than one out of four women who listen to radio listen online – either to customized streams or streams of a radio station. 70% listen to radio on a radio. Which is a majority, but a long way from what that number used to be. In fact, in the last year, the percentage of women who listen to radio on a radio on a weekly basis dropped 8% – from 95% to 87%.
Women are shifting their listening online. Listening to radio is growing – but listening via AM/FM is not…
Now Adele Is Snubbing Spotify
Last week the world belonged to Adele, who won award after award at the Grammys. But you can’t hear 21, her award winning album, on Spotify. Adele’s pulled her music from the service.
Joining Coldplay, Paul McCartney and a few others, Adele – most likely with the encouragement of her record label, is boycotting Spotify, pulling her new album 21 from the service. This move is becoming more popular by artists looking to maximize sales of their new or newly award winning albums. There’s a growing opinion that giving listeners access to their new music on a service like Spotify, where listeners can select the song they want to hear whenever and as often as they would like, will hurt album sales, either digital or physical.
Apparently, Adele’s management was willing to license 21 to Spotify for premium, subscription paying listeners only, but this option was declined by Spotify. It’s not hard to understand why they declined it, as it could easily have a snowball effect on other artists.
There is a concerted effort by a growing list of popular artists to control the access that listeners have to their new music. Most of the recent moves have concentrated on limiting the kind of free, on-demand access that Spotify offers, although recently Paul McCartney reportedly blanked all streaming of his newly released album.
Note: Although there are multiple reports that Adele’s 21 is not available on Spotify, I do have access this morning to a “sampler” version of 21 in my Spotify library. I’m not sure if this is a new development, or a function of the fact that I have had it in my library for a while..
Digital Song Sales and Streaming Performances Were Up in 2011
For the first time, digital music sales are larger than physical sales; accounting for 50.3% of all music purchases in 2011. Digital track sales set a new record with 1.27 billion sales in 2011; an increase of 100 million sales (8.4%) over 2010. Total digital album growth was 20% in 2011 as well, according to Nielsen Soundscan.
Adele had the top selling digital song, but Lady Gaga was the most streamed artist with more than 135 million streams while “Super Bass” by Nicki Minaj was the most streamed songs with nearly 85 million streams (according to Nielsen BDS).
Meanwhile SoundExchange reported that they distributed a record amount of money to artists during the 4th quarter of last year - $89.5 million with more than 18,000 payments, bringing year-end estimated royalty payments to $292 million (up 17 percent from the prior year). The royalties are paid by Internet radio, satellite radio and cable TV music-only channels for their use of sound recordings, and are distributed by SoundExchange to recording artists, record labels, and a non-featured artist fund.
The upward trends in both digital song and album sales and in streaming consumption and compensation are all evidence of a healthy online listening marketplace, something we can all be happy about.
eMarketer: 2012 Will Be A Big Year For Streaming Music
Cloud based streaming of music will be a key digital trend this year, according to a report by eMarketer. Rapid adoption of smartphones, tablets and other connected devices has shifted consumer expectations. Now, consumers expect consumption to be seamless across all of their connected platforms. This creates both a challenge and an opportunity for content providers and advertisers as they move to meet those expectations.
Music is a key example of content that consumers will seek to access mobilely and across multiple devices. Platforms and technologies that give listeners instant access to their music collection on their assortment of devices are perfectly suited to this challenge.
Streaming music, or cloud based music as eMarketer refers to it, will get its long term test in 2012. 
While a large part of the challenge to these online services is to keep listeners happy as they tune in on their collection of devices, that’s precisely the opportunity for streaming music as well. Music collections used to live at home, and then moved onto an ipod, but were purchased, collected and synced by the listener as a physical library. Cloud based music changes all of that, enabling listening to streaming services to replace the purchase of music. Services that allow that – from Pandora to Spotify to Amazon’s and Apple’s cloud services – are increasingly preferred by consumers.
Of course, the challenge in this major shift from purchasing music to streaming it from a service is the revenue, and the question remains whether the services can make money through subscriptions and advertising to cover licensing obligations and survive.
All of these challenges take place within a digital experience that continues to evolve – mobile commerce, targeted ads, privacy and social media are lending to an increasingly sophisticated online marketplace.
Last Year’s Biggest Story
Last year was quite a year for Internet radio and related streaming music services, and judging from some of the end of the year activity, this year should be lots of fun as well. I took the week between Christmas and New Year’s off, so here’s my just-a-little-late 2011 recap, summed up in what I think were the stories of the year.
1. Pandora went public. They raised $234.9 million in their public offering in June, selling 14.7 million shares at $16. The stock has struggled to regain that kind of price since then, but the service continues to gain listeners, ending the year with well over 100 million registered listeners.
2. Spotify launched in the US. While they would have liked to get their ducks in a row and have launched before Pandora’s public offering, Spotify did launch in July. Europe’s most popular streaming service began serving US listeners and gaining great attention with mobile apps, on-demand and programmed offerings.
3. Facebook made friends with streaming platforms. In September at its f8 developer conference, facebook announced that it would integrate third party streaming music apps into its platform, opening up the gates for those services to gain listeners as folks listen and like songs and share them with their network of friends.
4. iHeartradio revamped and relaunched. The all new iHeartradio includes all the streams offered online by Clear Channel stations as well as streaming channels. Other broadcasters are offering their programming through the platform as well – including Univision, Cumulus/Citadel/ABC, and EMF. These changes signal Clear Channel’s intention that iHeartradio become a portal to streaming broadcast stations.
5. Digital trendspotter and investment analyst Mary Meeker predicts that online audio is the next big thing.
Those are the five things that I think were the biggest stories in online radio in 2011. I think the real story is a combination of all of them – an investment friendly marketplace with increasing competition and opportunities. What do you think?..
Pandora’s Free Concert Series
Last fall when Tim Westergren keynoted the RAIN Summit in Chicago he spent time talking about how Pandora can use the information they gather from listener’s preferences to connect artists with their audiences. Based on a listener’s location, and the songs they give thumbs up or down to, Pandora can guess what other artists they might like.
Tomorrow night, Pandora will host the first in a new series of free live concerts based on just that kind of information. The concert will feature Dawes, an emerging rock band from Southern California. Pandora data shows that Portland-area listeners are 25 percent more likely to enjoy a Dawes song and 30 percent more likely to create a Dawes station on Pandora than listeners in any other U.S. city. Invitations based on a listener’s musical preferences were sent to listeners in the Portland area by email.
Pandora Founder and Chief Strategy Officer Tim Westergren said, “Connecting artists and their fans is part of our mission at Pandora and we bring some very unique capabilities to that task. Our data shows that Dawes has a sizeable potential audience in Portland and we’re excited to help bring them together.”
Westergren is a musician himself and someone who really cares about artist relations and music discovery. He often talks about the value that Pandora can offer to artists by helping them find their fans.
Taylor Goldsmith of Dawes said, “As we have traveled the country, we often hear from our listeners that they discovered us on Pandora. We are excited that, now, through this new concert series, we’ll get to connect in person.”
Sure wish I could be in Portland tomorrow night to see the power of personalized radio firsthand..
