The competitive landscape of online music services had a busy week, with everyone out and about in Austin at SXSW wooing press and fans. Just 3 months after announcing that they had reached 5 million subscribers globally, Spotify announced this week that they now have 6 million paying subscribers, and declared themselves the fastest growing music service ever. Their presence in Austin featured a house, painted Spotify green, where they hosted live bands.
Rdio announced this week that they are expanding to still more countries. Their service, which new subscribers can hear ad-free for the first six months, is now available in United Kingdom, Australia, Belgium, Canada, Denmark, Estonia, Finland, France, Netherlands, New Zealand, Norway, Portugal, Spain, Austria, Iceland, Ireland, Italy, Latvia, Lithuania, Mexico, Sweden and Brazil, in addition to the US.
Pandora hosted a “Discovery Den” that featured many well known artists, some of which also made an appearance at iHeartRadio‘s SXSW party. Rhapsody had a party, and hosted a panel as well: ‘Streaming Music: A River of Cash or up the Creek.’ The panel will bring together perspectives from all sides of the issue to examine what roles streaming music services can play for artists today and in the future. Hats off to them for that.
In a move that will affect less than 4% of its users, Pandora announced yesterday that it will begin limiting listening on mobile devices to 40 hours a month. As they approach that limit, the listener will hear from Pandora, and be offered a couple of options. They can choose to pay 99 cents for unlimited use of the service for the rest of the month, or they can sign up for Pandora One for $3.99 a month, which gives them unlimited, commercial free listening to the service.
In a blog post yesterday, Pandora founder Tim Westergren explained that “ this is an effort to balance the reality of increasing royalty costs with our desire to maximize access to free listening on Pandora.”
In addition to helping cover royalty and other expenses, this will get the attention of the heaviest users of Pandora. I’m sure Tim would like to mobilize those listeners to help persuade their congressional representatives to pass the Internet Radio Fairness Act. As he points out in his post, “Pandora’s per-track royalty rates have increased more than 25% over the last 3 years, including 9% in 2013 alone and are scheduled to increase an additional 16% over the next two years.”
It’s a strategy that could work well for Pandora, as they could win in one of two ways, either by inspiring their most dedicated listener base to join them in lobbying Congress, or by converting a portion of those listeners to paying subscribers. It’s also a move that may please investors, who have been concerned about Pandora’s ability to monetize mobile impressions.
All in all, this is sounding like a pretty good strategic move..
Electronic dance music, EDM, is getting a lot of buzz lately. Clear Channel’s iHeartRadio launched an EDM channel called Evolution in November with quite a bit of fanfare, including mixes curated by famous DJ’s like Pete Tong and a party in NYC hosted by Afrojack, another world famous EDM style DJ. Evolution quickly became the most popular online only channel on iHeartRadio. Next Clear Channel flipped its new station in Boston, WHBA, to the format.
As still more evidence of the popularity of the format, Billboard decided last week to start a new Dance/Electronic Songs Chart.
But EDM is not a new radio format, nor is it newly popular. It’s been a huge hit online for years, as stations like Digitally Imported know. DI.fm is the biggest electronic music station in the world, with more than 50 channels and more than a million listeners, according to Ari Shohat, Founder of the station. He says that EDM is a very broad category of music and the new stations and chart are focusing on the pop acts. One of the first Internet radio stations, DI launched in 1999 and plays “addictive electronic music” and offers listeners the long tail, with 50 channels of everything from House and Hardcore to Techno and Trance.
DI has had a large listener base for a long time. The new wave of more mass appeal stations online and on-air, as well as the new attention to the format from Billboard are benefitting from a format that has been alive and well online for a long time. EDM may be the first format to actually take hold online and then move on-air, but it probably won’t be the last..
If venture funding is a measure of the success of online music then things are going well, according to a recent article which claims that music industry ventures raised $621 million in 2012. The article also points out that funding to music ventures is up 34% while funding across all sectors has dropped 10%. You may want to take some of this with a grain of salt however, an article in Billboard a few weeks ago points out that some of the companies counted in that big number are actually not music services at all.
Nonetheless, there were a number of services that got big dollars last year, including Spotify, Deezer, TuneIn, SoundCloud, Senzari, Soundrop, exfm, Songza, Jelli and The EchoNest, all services that are directly related to the streaming marketplace. According to my tally, streaming related services took $328 million in funding last year, with Deezer and Spotify leading the charge.
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…
News that Nielsen will purchase Arbitron is good news for online radio services like Pandora. Nielsen, which measures many media segments, already has a strong foothold in digital and cross platform measurement, not only in the US but globally. Yesterday’s announcement that they will purchase Arbitron was quickly followed by statements that they will measure online radio services like Pandora as well.
I call this excellent news. Arbitron, which has dallied in Internet radio measurement several times in the past, recently denied Pandora a place at the table when they sought to be measured alongside broadcast radio counterparts. Pressure from those broadcasters, who spend a lot of money with Arbitron, certainly appeared to be one of the reasons that the company decided to measure streaming only as an adjunct to broadcasts. That decision enraged advertising agencies as well as online only services.
I think Nielsen’s entry into radio and digital audio measurement would be an excellent thing for the marketplace. Their multi-media measurement platform and global footprint likely mean that broadcasters won’t be able to flex their muscle to influence company decisions that are better made with a broad perspective. Nielsen is a company that understands that today’s advertisers need measurement tools that can enable accurate media placement across many platforms and technologies. Folding radio into that mix can benefit radio as advertisers are able to view it as an important part of a larger multi media landscape.
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…
Aritaur Communications has announced that it will sell the frequency for WMVY, its Martha’s Vineyard fm station, to WBUR, Boston’s NPR news station. Their plans for the signal do not include continuing to air the local flavored, eclectic-folk-alternative format that generations of islanders (either physically or virtually) have come to love. The staff of the station, headed by highly talented program director and all around great gal Barbara Dacey, are hoping that the community (local and online) will rally and raise enough cash to keep the programming streaming online.
I met Internet radio for the first time while I was managing Aritaur’s group of radio stations, and spending a lot of time at WMVY. It is, without a doubt, the best radio station, bar none, in the world. On any given day, at the little house at the end of a dirt road that we called an office, any number of fun, folksy, or famous people might stop by to visit. It is one of the few broadcast stations left that doesn’t program for mass appeal, which of course is its magic.
Dacey and others at the station are hoping to raise $600,000 in sixty days to keep the format alive online, which would be a fine place for it to live. While this may seem like a daunting goal, take this little story as an example of the power that a community has to save things that it values. I live in a small village in Connecticut where last year after hurricane Irene, our local market went out of business. For four months our community mourned the loss of our local store, before deciding to form a co-op to replace it. In a few short months the store had over 600 members (at $195 a membership) and had also loaned the store over $300,000 (in more than 200 individual loans). The store is open for business, and doing pretty well, in a village that is a lot smaller than Martha’s Vineyard.
So here’s wishing my friend Barbara and her crew a lot of luck in this next chapter. I’m sorry that WMVY won’t be on the air the next time I head out to the cape, and I know that Aritaur’s founder Joe Gallagher will miss it too; owning that station was his dream come true, selling it can’t have come easy.
In the meantime, you can still listen to the best there is, right here…
I’m electronically challenged this week due to Sandy. While the first couple of days weren’t so bad, we’re now into day four and the outage is losing its charm. It’s really hard to keep up with news when you don’t have Internet or television. Unfortunately, the local radio programming in our part of the world is completely inadequate. Most stations have few or no news reporters. So there’s a ton of local news and a real dearth of local news reporting. Texts have become my primary way of staying connected. School cancellations come by text as well.
I have to admit, this has given me pause to think about the value of an fm chip in phones. Even though I can listen to a stream right now, my battery charge is a little too precious for that. Would I listen to broadcast radio on my phone during this outage? I might, especially if I could get decent local news by live reporters who would tell me what the power outage situation is, update me on what is going on in town, what roads are flooded, and where I can get an Internet connection. Some of my neighbors are looking for even more basic information like showers and water.
Unfortunately, a lot of local radio stations have peeled back their staffs to such a point that the only “local” programming they offer is top-of-the-hour headline news, and some ads. That’s not the kind of thing that is going to make people listen on their smartphones, even if they could..
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…