In a move that will further extend Spotify‘s brand as the go-to platform for on demand streaming music, Spotify and Yahoo have announced a partnership. Spotify will replace Rhapsody as the music platform within Yahoo Media network and Yahoo will get an app within Spotify’s platform.
While times have been a little tough for Yahoo, this still represents a big deal for Spotify in terms of extending its reach and gaining new listener registrations. Spotify reportedly has 10 million registered users. Their reach in the US has been growing, but still small compared to Pandora.
Yahoo has had several twists and turns in its streaming music path – in the early 2000s they had their own Yahoo Launchcast, one of the biggest streaming services at the time. They eventually terminated that service due to expenses, primarily royalties, and signed a deal with Rhapsody and CBSRadio in 2008. While there was never any announcement, it looks like the Launchcast service, which was “powered by CBSRadio”, stopped streaming mid last year.
This is a great deal for Spotify, and one that compliments its global brand and reach. From the Facebook deal to this one, Spotify’s CEO and Founder certainly has the capacity to get the big deals done. He’s made no secret of his vision that Spotify become the world’s on-demand music library, and deals like this will certainly help him extend that plan.
There’s a special place in my heart for WFNX in Boston – after all, my first job out of college was at the Boston Phoenix, Boston’s alternative weekly newspaper. In fact, I was working at the paper when they bought the station and launched Boston’s alternative rock station. It was pretty cool.
And that was – ahem – a long time ago. So it was no small thing when owner Steven Mindich decided to sell it to Clear Channel. The newspaper and radio station are big brands in Boston, and synonymous with edgy, independent content. Not exactly the things that the Clear Channel brand brings to mind. Soon after the sale, most of the staff at the station was let go.
Today Boston.com, owned by the Boston Globe, announced that they’ll hire several on-air personalities from WFNX and stream a station online, offering alternative content similar to the stuff the heritage FNX broadcast.
According to an article on Boston.com: “Boston.com has been at the forefront of multimedia for some time now, producing award-winning videos, live video programming, interactive content, and more,” Lisa DeSisto, General Manager of Boston.com said. “We’ve long thought radio would be a natural extension for us, and we’re fortunate to launch with such an incredible team.”
I’d call this move a big opportunity. Boston.com picks up a big brand with a loyal local following and expands their multimedia footprint. At the same time, they get to kick a little dirt at that upstart weekly newspaper that’s always been a little thorn in the Boston Globe’s side…
TuneIn, the popular portal to Internet radio stations, has been on fire lately with announcements of new partnerships with broadcast stations. In recent weeks they have announced new partnerships with some pretty big names – like ESPNRadio and CBS Radio, Fox News Radio, Buckley and Salem Radio Groups, Bloomberg, and many more. TuneIn now offers access to more than 70,000 stations in its guide, a number that’s up 52% in a year.
TuneIn has a very popular mobile app which ranks in the top five in the Music category. They also provide tuner services to a wide array of devices, so partner stations enjoy both mobile and connected device access to grow their audiences. Stations get free, industry-leading tools, such as analytics through TuneIn Amplifier, and access to the audio service’s ad platform.
TuneIn has over 30 million active listeners per month. They are as close as anyone to having a uniform universal portal that can enable listeners to have easy access to anything they want to hear.
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…
Royalties collected by SoundExchange grew by 40% in 2011 to more than $377 million, up from $270 million in 2010. According to their annual report, SoundExchange distributed $292 million in the form of payments to artists, in 2011. The revenue represents royalties from streaming, cable and satellite services.
According to a report by the New York Times yesterday, SoundExchange has paid $1 billion to artists and record companies since its founding in 2000. Quarterly payments this year top $100 million. This significant revenue figure was a long time coming and the recording industry has suffered huge losses due to the shift from listening to cds to streaming. Now, some artists are starting to recognize the online opportunity.
According to the Times, Jagjaguwar Records, whose acts include Bon Iver and Dinosaur Jr., has received $95,000 in payments from SoundExchange since 2007, according to founder, Darius Van Arman, who called the service “an increasingly vital source of revenue.”
This news comes at a time when Pandora Founder Tim Westergren and others are lobbying Congress for more equitable performance royalty rates among broadcast, satellite and streaming services.
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.
Tim Castelli, President of National Sales, Marketing & Partnerships for Clear Channel Media and Entertainment, will be the keynote speaker at this year’s RAIN Summit Dallas, Tuesday, September 18th at the Anatole Hilton in Dallas. Castelli joined Clear Channel in March from AOL as their digital chief. His resume also includes Tech Industry Director for Google and Publisher of Rolling Stone Magazine.
Clear Channel’s role as a leader in the development of radio’s digital future is significant and Castelli’s keynote should be an insightful perspective from one of the company’s key players.
RAIN Summit Dallas will be held on the day immediately preceding The Radio Show produced by RAB and NAB. A “partner event” of The Radio Show, RAIN Summit Dallas is the premiere educational and networking event for Internet radio, focusing on the intersection of radio and the Internet. RAIN Summits are geared to both broadcasters on the Web (like Clear Channel Radio and CBS Radio), and Internet-only webcasters (like Pandora, Slacker, and AccuRadio).
As another highlight of the event, “RAIN: Radio and Internet Newsletter” Publisher Kurt Hanson will present his “State of the Industry” address on the future of radio in this age of new media. Hosted by Hanson, the Summit will feature a variety of other speakers and panelists, offering insights on the business, programming and technology aspects of online radio, including topics such as “Monetizing Mobile” and “Social Radio.”
RAIN Summits are a great way to learn and network in the Internet radio space. The speaker list for September is growing and already includes execs from NPR, CBS Local, Myxer, Cox Media Group, TuneIn and many others. For more info, click here. Hope to see you there!
By way of disclosure, I am the President of RAIN Summits.
If you’re a regular reader you know that I’m a Mary Meeker fan. In her latest presentation Meeker, one of the smartest people on the planet when it comes to mobile trends, said that the mobile opportunity continues to be huge. IPhone’s impressive game-changing adoption rate has been dwarfed by that of IPad and Androids, and despite the tremendous pace, smartphone adoption has a huge remaining upside.
Mobile traffic now accounts for 10% of the Internet. Up from 1% in late 2009. And despite all the negative things you may have heard about mobile monetization, Mobile Commerce accounts for 8% of eCommerce, with spending practically keeping pace with time spent with the medium.
Unfortunately, as you have probably also heard, average revenue per user for mobile is not keeping pace with desktop stats. Meeker uses Pandora, along with Zynga and Tencent as examples and actually Pandora is doing a pretty good job of monetizing mobile ad revenue, compared with some of the others. (Personally I think it’s all about the user experience – those ads on Words With Friends are so annoying!)
Actually, what has happened is that mobile activity has helped boost clicks, which is driving down the cost per click. For now. The good news is that mobile monetization will catch up. In fact Meeker says that in 1 – 3 years it will surpass desktop.
Clear Channel’s move to make a direct licensing deal for over the air performances with record label Big Machine is a stunning development for the radio industry. I’ve spent a day or so pondering all the ways this could impact the issues, and have come away marveling at what a forceful move this was by Bob Pittman and his team. (Read excellent coverage by RAIN here.)
The radio industry has been refusing to cut a deal with record companies that would compensate artists for over the air play in exchange for a better deal on streaming royalties. Broadcasters and the NAB have tried and failed to come up with a solution, and the issue is currently headed for Congressional intervention – with Future of Audio hearings that started yesterday on the hill. Hence the incredibly nervy and savvy timing of Clear Channel’s announcement that they had signed up to pay a share of both on-air and online revenues to record label Big Machine, the company behind such big names as Taylor Swift, Rascal Flatts and Tim McGraw.
Bob Pittman is indeed just what the radio industry needs.
The radio industry has been moaning about streaming royalties for years. This has caused them to take a half hearted approach to Internet radio, which in turn has created mediocre offerings that are not competitive with highly developed interactive offerings such as Pandora, Spotify and others. But their unwillingness to pay over the air royalties to artists makes the record labels unwilling to negotiate better digital deals with them.
Meanwhile, online listening is growing exponentially.
“Unrealistic rates on the digital side were choking the ability to expand digitally for radio companies,” said Irving Azoff, a Clear Channel director and chairman of Live Nation Entertainment Inc.. “We’re trying to convince labels to enter into a direct deal because we can’t get legislation passed,”.
“Someone has to go first, someone has to take a risk,” said Clear Channel CEO Robert Pittman. “If digital grows a lot, this will be a good deal. It’s a gamble. But you win nothing if you don’t take a chance.”
So Pittman took a chance. He took a look at the future of radio and decided that digital is it. Reluctant to let Congress determine how his game will be played, he cut a deal with a little record company that has a few big names. By doing that he forced the first brick out of the wall between broadcast radio and performance royalties for artists, and I suspect we’ll see the whole thing come tumbling down. Broadcasters will pay over the air royalties, because their hand was forced, but also because it just doesn’t make sense that other platforms have to and they do not. Playing fields will be leveled, programming will improve and opportunities will grow – for radio stations and for recording artists.
In a pattern that is consistent with consumer behavior over time, Pandora listeners use the service regularly but less than when they started using it. That’s according to some recent research by Bridge Ratings, a company that focuses on Internet radio usage.
In a study specifically focused on satisfaction among Pandora users (but not sponsored by Pandora, and perhaps sponsored by one of their competitors), Bridge Ratings found that Pandora listeners start out with high expectations for the service. Listeners under 34, who defined themselves as heavy users, said they were unhappy with the 1-2 commercials an hour that they heard. They were also less satisfied with the personalized music selection over time. Time spent listening and number of sessions per day tend to decline with this age group over time.
The survey is interesting, but I find the information provided is just half the story. There’s no data on what percentage of the people surveyed said they liked the service “Alot” or “Just Ok” or “Not Using As Much As I Used To”. And even those choices seem skewed to me — wouldn’t you be inclined to pick the one that includes the first person in the response? Aren’t the answers all supposed to be formatted similarly?
Nonetheless, I suspect the findings are evidence of a trend – Pandora’s popularity as a free mobile app has brought them an enormous registered user base. It’s natural that a portion of those users will not become steady users. Once introduced to streaming, there’s a wide variety of options available for listeners to choose from these days – so Pandora loses listening time to those services as well. Nonetheless, Bridge Ratings notes in its conclusion: “the study found that while Pandora consumers who have been using the service a little as eight months begin seeking other sources for a similar experience, they will continue to use Pandora as their primary source for the customized Internet radio experience.”