Streaming news at CES 2013 last week was all about integration into cars, with big announcements from Ford and JacAPPS, Pandora and Chrysler, Livio, Tunein, and lots of others. The news about Sprint and Nextradio is big as well.
Connected cars are a reality now, and Pandora has played a large part in that evolution. Pandora’s been concentrating on getting their service integrated into connected devices for a long time, and their efforts have had a very large impact. They’ve led a coordinated effort which can take a lot of credit for the high level of interest in connected cars at this year’s CES. Sure, lots of companies are enjoying the advantage of that increased buzz, that’s how it works – pioneers lead the way, open the doors, and others follow, and hopefully flourish.
I’ve said it before and I think it bears repeating – the Internet radio industry has benefitted enormously from having a giant like Pandora in the space. They’ve generated lots of buzz and innovation that others have and will continue to benefit from in terms of listeners as well as technology. This Techcrunch interview with Pandora CTO Tom Conrad offers a nice overview of where they have come from, and how they do it.
This morning in my email, one from Spotify offering me a bunch of ready made playlists for New Year’s. The Top 100 Songs of the Year on Spotify, Most Popular artists, Most Popular Female Artists, Most Popular Male Artists…you get the idea. All waiting for me to listen to and share with my social networks to celebrate the arrival of 2013.
This is very smart marketing by Spotify. The biggest party night of the year and they’re offering up easy soundtracks for the party. It’s an excellent use of playlist based streaming, and a great way to highlight their music library. I’ll bet they get a lot of traction and new listeners from it.
Pandora is offering a slate of End of the Year genre stations as well, including 2012 Top Pop, Adult Rock, College, R&B and Hip Hop, and New Years Eve Party Radio. Built in soundtracks for your party. iHeartRadio is offering one channel, called Party 2013 Radio.
In 2013 streaming audio services will continue to look for ways to grow audience by making their offerings as enticing as possible. Personalizable channels that can be tailored for special events are an easy way to highlight interactive features and hook listeners. In fact, those channels are quite possibly a platforms best marketing tools..
Happy 2013 to you and yours, may you enjoy the streams of your dreams in the coming year…
Fred Wilson, a partner in the investment firm Union Square Ventures, is a music lover and his company is invested in several companies in the streaming audio space including SoundCloud, Turntable.fm, and Targetspot. Wilson has been thinking and talking about monetization of streaming audio services, and his ideas are worth repeating.
In a recent interview, Wilson talked about advertising as a revenue model for streaming services. He sees the radio advertising market, pegged at $17 billion, moving online as listeners transition more and more to listening on smartphones. As that happens, services like Pandora, Rdio and Songza benefit, but so do artists.
In his blog post this morning, Wilson writes about online ad revenue models, and it’s a very interesting post for anyone in the business. He outlines the complexity of the online ad marketplace, and concludes that scale is a very important factor for success in the advertising revenue model. Dollars are limited, and with more and more services going after them, rates are dropping.
Pandora is certainly the service that is best positioned to test this out – they have the scale and are aggressively pursuing an ad revenue model. Each time they gain a dollar in advertising from the general $17 billion radio revenue pool, artists win too, because they get paid for music played by Pandora, but not for music played by broadcast radio. Right? So that means the artists and their labels should want online services which are pursuing ad revenue models to succeed, doesn’t it? Just sayin…
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.
Internet radio stations that neglect to offer programming for hispanics are missing out, since of the leading demographics in terms of mobile usage, smartphone penetration and web radio listening. One in four Hispanics reported listening to Internet radio in the last 7 days, compared to about 18% for the general population (in a US based study by The Media Audit).
One streaming service that has been catering to that market for a long time is Batanga, which launched in 1999. I spoke with the guys who started it a few times about joining the Net Radio Sales network, but they always assured me that they were doing just fine on their own. In 2005 they merged with a company called Planeta out of Miami Florida. They recently announced upgrades to their platform that enhance interactivity - allowing users to build digital radio stations by adding the songs and artists they love, offering similar sounding songs, and excluding the music that they don’t want to hear. Other new features include lyrics and more songs.
Meanwhile Pandora has been paying close attention to the Hispanic portion of their audience, which accounts for 20% of their overall audience, according to AdWeek. Reporting on a discussion hosted during Advertising week recently, AdWeek quotes Pandora sales vp Priscilla Valls, who said that 80% of Pandora’s Hispanic users are on mobile devices. Pandora plays 7,000 latino artists in its offerings. While Pandora does not ask for race or ethnic background in its listener profile, but does conduct a yearly survey among listeners for supplemental information for advertisers. This info enables them to target Hispanics on behalf of advertisers.
“We have a variety of marketers who advertise to that audience in Spanish, Spanglish and in English,” Priscilla Valls, a vp of ad sales for Pandora…. ”What we are finding is that brands are using their general budgets to also reach a Hispanic audience.”
With 20% of their audience speaking Spanish, Pandora is hip to hispanics…
It’s high season for political advertising, and Pandora is a new favorite for lots of candidates, according to US News. It turns out that Pandora’s highly targetable advertising model, which allows advertisers to micro-target by zipcode, not to mention age, gender, and even musical tastes, is very appealing to the folks that decide where all the money behind political campaigns will go this season.
“On Pandora we know exactly who our audience is, so if you’re trying to reach moms, the D.C. area, or young people in Ohio, we can do that,” says Francisca Fanucchi, a spokeswoman for Pandora. When users sign up for Pandora, they give their ZIP code, gender, date of birth, and E-mail address, all of which are used for targeting purposes, Fanucchi says. Political research firms also buy lots of consumer behavior data to refine their targeted ads.
It turns out that your musical preferences also say a lot about your political views. Recently, music data firm The Echo Nest noticed some distinct profiles among listeners of certain types of music. Turns out Kenny Chesney or George Strait fans are reliably Republican while, Rihanna, Jay Z, Madonna and Lady Gaga fans are Democrats. Fans of The Beatles, Stones and Johnny Cash are hardest to predict.
Politicians advertising on Pandora can also use their new email sign-up feature. That asks the listener to let Pandora provide his email address to the politician so they can contact them directly.
All of this is not foolproof however – on a recent longish drive with my husband we listened to Pandora on my husbands phone, and heard repeated ads for Linda McMahon, the GOP candidate running for Senate in Connecticut. Problem is, he’s a pretty liberal democrat who just happens to like Pink Floyd…
Details of Apple’s entry into the Internet radio space appeared last week, and because it’s Apple, they got lots of attention. Apple has been interested in the space for a while, so this does not come as a big surprise. As WSJ.com puts it – Apple pioneered the online music business with iTunes, and drove it with hardware sales. Now that streaming services have begun to cut into song download sales, it’s time for iTunes to step it up.
Reportedly, Apple is in private talks with the record labels to negotiate royalty deals. Everyone knows that the performance royalty issues related to streaming are prohibitively expensive – content acquisition is the pricey challenge in the space. Indeed, Pandora shells out 50 – 60% of its revenue to labels and artists. The question is, does Apple have the kind of clout with the labels that can leverage an improved royalty landscape? And if so, is it possible this would benefit the streaming marketplace overall?
As far as what the service will be – it does sound a lot like Pandora. The NY Times says “Apple’s service would probably take the form of a preinstalled app on devices like iPhones and iPads and might be able to connect to users’ iTunes accounts to judge their tastes.”
First responders to the news about a streaming service from Apple proclaimed doom and gloom for Pandora. And the truth is, Pandora is so big and so reliant on Apple at this point that they probably will lose listeners if Apple opens up a service of their own. But that doesn’t mean it would be the worst thing for the streaming marketplace. In fact, given Apple’s golden touch, the fact that they are looking so closely at streaming and radio in general these days, could bode well for the space…
Triton released new audience data this week and the most interesting thing on the ranker is the fact that Clear Channel’s streaming platform is beginning to pick up steam, with stats growing 7% from April to May.
As RAIN points out in their analysis yesterday afternoon, Pandora‘s number grew about 4% from April to May, which could be an indicator of slowing in terms of their exponential growth. With more than a billion session starts and close to a million active sessions during the month, their market share is massive. Clear Channel’s growing active session number is approaching just 15% of Pandora’s number.
One thing that can continue to drive Clear Channel’s growth is their ability to brand iHeartRadio throughout their media empire. The deals that they have signed with other broadcast companies also drive listener registration for the iHeartRadio platform. Once registered, those listeners to Cox, Greater Media, Cumulus, or other partner stations in the platform, can easily be converted to listeners to iHeartRadio. Recently introduced features such as artist curated channels, personalized listening options, and social offerings are helping to drive both sampling and listening to iHeartRadio.
Here’s the ranker:
Spotify has moved to offer its mobile streaming options, previously locked down under a monthly subscription, free to listeners. In an obvious response to the exponential growth that Pandora has experienced in mobile listening, Spotify will now feature “free mobile radio – Spotify style”.
The offerings feature the ability to create a station from a song, artist or genre and unlimited listening. Calling it the only free radio that you can save, Spotify mobile offers interactive options to like or dislike a song to influence your station or save the song to a playlist. Until now, it cost ten bucks to get all that on your mobile devices.
It sounds like a good offering, one I’ll bet Spotify wishes they had jumped on a little earlier. Pandora, with 150 million registered users and direct connections on lots of dashboards and tuner devices, has had a handy headstart. This move by Spotify is recognition of the impact that a popular free app in the iPhone and iPad app stores can make.
Free users in the US will hear advertisements from the following launch partners: Chevrolet, Durex, Heineken, Red Stag by Jim Beam, Lipton Iced Tea, Macy’s, McDonalds, Progressive, Red Bull, Taco Bell, Verizon Wireless, and Warner Bros – all of which are current Spotify advertisers.
As for Pandora, I suspect they knew it was only a matter of time before Spotify moved to pick up a piece of all that mobile listening to Pandora for free. They may even welcome the fact that Spotify will now join in their efforts to monetize mobile streaming ads…
Pandora has announced a reseller program that enables companies with local sales teams to sell Pandora ads as part of their portfolio. This is a way that the company can expand beyond the top tier markets where they have their own sellers, to smaller markets. Apparently it’s been in place for a few months now – and it’s working – the local advertising strategy has resulted in more than 800 local advertising campaigns scheduled to run this year, a 100 percent increase from just two months ago.
This year, Pandora has been placing lots of emphasis on expanding its ability to sell ads market by market – a strategy previously considered the turf of local broadcast stations. They hired Edison Research to parse data and create local market comparisons to Arbitron data subscribed to by local radio stations, and more recently contracted with Triton for market by market ratings.
With 70% of their massive audience on mobile devices, Pandora can offer local market media companies a lot of extra clout in reaching mobile customers. Mobile impressions are probably more valuable as location based ads, targeting listeners who are close to an advertiser location. A local sales team can drill down to that level and find advertisers suitable for those impressions.
Pandora Chief Revenue Officer John Trimble said, “Consumers are increasingly mobile, and advertisers want to be where their consumers are. We have a clear advantage, both in our scale of more than 100 million people accessing Pandora on mobile, and our unique ability to help advertisers reach targeted audiences through both visual and audio ad formats.”
Some of the media companies maximizing their reach through the Pandora Local Reseller Program include:The Miami Herald (a McClatchy newspaper), The Salt Lake Tribune, The Tacoma News Tribune (a McClatchynewspaper), The Ventura County Star (an E.W. Scripps Company newspaper) and U-T San Diego.