AOL Music announced, or at least its laid off employees announced on friday afternoon that it will shut down. Shortly after that, AOL Radio’s twitter account explained that the streaming service operated by Slacker would not be shutting down. The shut down encompasses the main site that offers free music videos, song lyrics, downloads, and music news and includes sites Noisecreep (hard rock and heavy metal); The Boot (country); The Boombox (hip hop/R&B); as well as Spinner and AOL Music.
AOL Radio and reportedly Shoutcast will survive the cuts. In June of 2011 AOL Radio paired up with Slacker in a deal that moved their channels into Slacker’s portal of offerings. Slacker picked up the traffic and also the costs of streaming those channels.
Shoutcast, which AOL acquired back in the late 90s, is another story entirely. That portal gives bandwidth to more than 50,000 global stations. They have a very large audience and are quite possibly the biggest streaming portal online. (It’s never been clear to me what the business model is for Shoutcast, but that’s another story.)
AOL has certainly been through changes, struggling to retain or regain brand prominence in recent years. In 2011 they bought Huffington Post and have placed more emphasis on becoming a top notch news portal. AOL Music is likely a victim of that transition.
RAIN Summit Europe is Thursday May 23 in Brussels. Register here!
In the UK, royalties from online services jumped by 32% last year, according to a report from PRS for Music, the Performing Right Society in the United Kingdom for composers, songwriters and music publishers. In fact, royalties from online services (including both streaming and downloading) now produces more revenue than radio, according to the new report.
The growth figure reported by the UK body is very similar to the percentage increase recently reported by SoundExchange, the licensing and collection organization for performance royalties in the US. The 2012 reported figure for royalties collected in the US in 2012 was $502.2 million, a 35% increase over the 2011 number.
What’s different of course is that in the US, performance royalties are not paid by broadcast radio services, so a comparison of online versus royalties from radio sources cannot be made.
On May 23 in Brussels we’ll be discussing the business of Internet radio and online audio at RAIN Summit Europe. View the speaker list and agenda here.
New research presented by Russ Crupnick of NPD Group at RAIN Summit West underscores the promotional value of AM/FM radio relative to song sales. More than half of the folks surveyed named “announcements on AM/FM radio” as the primary thing that would make them shop more for new music.
Given the drastic drop in song sales revenue in recent years, that’s an important fact. In 2005, 73% of the US Internet population bought at least one cd, and in 2012 that number was 35%. Some of those purchases were replaced with song downloads, which jumped from 9 to 23% in that same period.
Meanwhile, the same population said that they stopped illegally downloading music because they could listen to it on the radio – online (45%) or on the air (33%).
So what does all this mean? One way to look at it is that radio – both on-air and online is one of the most important weapons the music industry has for driving revenue…
Rain Summit Europe is Thursday May 23rd in Brussels. Join us for a great day of panels and presentations, plus excellent networking at the largest gathering of online audio professionals in Europe. Hope to see you there!
Last week Pandora announced a significant milestone when they reached 200 million registered listeners. The fact that the number of registered listeners leapt from 100 million to 200 million in two years makes it still more impressive. Remember, Pandora’s user base is largely in the US, although they have recently expanded to a few other places such as Australia.
During a presentation last week at RAIN Summit West in Las Vegas, hundreds in the audience got a first look at updated trends in Infinite Dial 2013. Arbitron SVP Bill Rose and Edison Research President Larry Rosin offered some stats on Pandora, which has an impressive brand awareness recognition rate of 69% among adults 12+ in the US, a number that grew 10% since last year’s study. iHeartradio showed impressive brand awareness in the new study as well, with 45% brand recognition, a jump of almost 15% since last year.
The study also reported that close to half of the folks surveyed had downloaded the Pandora app onto their cellphone. This fact reveals the steam engine driving both the growth in audience and brand awareness for industry leader Pandora – their amazing success with mobile apps. As usage of smartphones and tablets has soared, Pandora’s been right out there in front, gaining front page status on those devices. 21% of cell phone owners now saying they have used their phone to listen to a stream in their car, yet another indication of the growing importance of mobile devices.
We’ll be discussing mobile devices, connected cars and a lot more again on May 23 in Brussels at RAIN Summit Europe. Have you registered? Hope to see you there!
Yesterday SiriusXM launched their new personalized streaming platform MySXM, a streaming option available to its subscribers for an add-on fee. The service features 50 channels that can be adjusted using “slider bars” to suit the listener’s personalized tastes. It’s described as more interactive than Pandora, with on-demand features that go beyond what Pandora offers. Backend music intelligence platform The Echo Nest provides the service with its personalization, and Omniphone provides cloud based services.
Make no mistake, SiriusXM is still a satellite company, and this new offering is all about protecting its subscriber base. With an estimated 120 million folks in the US listening online in the past month, streaming is the fastest growing radio platform. Offering that as an option is a way to preserve its subscriber base.
According to year end reports, SiriusXM had close to 24 million subscribers at the end of last year, while Pandora has 200 million subscribers, 70 million of whom are actively monthly users. SiriusXM does not provide information other than subscribers.
On the heels of a highly successful RAIN Summit West in Las Vegas last week comes the announcement of the agenda for RAIN Summit Europe on Thursday May 23rd. Web radio professionals from across Europe will gather to discuss all facets of Internet radio and online audio. Executives from all the key businesses in the industry will participate in panel discussions, make presentations, and advance the development of the business of online audio across Europe.
Topics on the agenda will range from business to technology to programming and include best practices for measurement of online audio, multiplatform content distribution, mobile streaming, sales strategies, and programming for audience growth. Presentations will be presented by James Cridland of Media UK, David Deslandes of Deezer, and Simon Gooch of SBS Radio Sweden/RadioPlay.
The confirmed speaker list includes an impressive mix of Internet radio and online audio executives, with more being added:
- Ben Drury, 7Digital
- Hakan Kostepen, Panasonic
- Matthew Carver, EGTA
- Kjarten Slette, WiMPmusic
- Jan-Willem Bruggenwirth, 538.nl
- Christian Schalt, rs2 and KISS FM, Berlin
- Jan Poelmann, RMS
- Alain Reyes, NRJ
- Jöel Ronez, RadioFrance
- Ali Abhary, Spectrum Medya
- Robert Proctor, Audioboo
- Steve Whilton, Last.fm
- Patrick Roger, Triton Digital
- Holger Weiss, Aupeo
Registration is limited for this event, which was sold out last fall in Berlin. To register for the event using either Eventbrite or Amiando, click here. To submit a speaker proposal, send me an email (email@example.com). Hope to see you in Brussels in May!
The following is a guest post by Angus M. MacDonald, a digital media attorney.
Last week, SoundExchange publicly released its Annual Report (Draft) for 2012. According to the report, SoundExchange’s 2012 collections from all statutory services amounted to $502.2 million – yes, a half-billion dollars! And it was another impressive year-over-year increase in royalty collections for SoundExchange. For 2011, SoundExchange collected $372.2 million, meaning that it collected $130 million (or 35%) more in 2012 than it did in 2011. See SoundExchange’s Annual Report (Draft) for 2012, p.7.
However, as discussed below, Pandora accounts for all of SoundExchange’s revenue growth. In its most recent 10-K filing (released a few weeks ago), Pandora paid 55.9% of its revenues to SoundExchange for the fiscal year that ended January 31, 2013. See Pandora’s 10-K, p.22 (“For our fiscal year ended January 31, 2013 we incurred SoundExchange related content acquisition costs representing 55.9% of our total revenue for that period.”). According to the same 10-K filing, Pandora’s total revenues last year were $427.1 million.
Based on the above figures, Pandora paid SoundExchange over $238.7 million ($427.1 million multiplied by 55.9%) in the 12 months that ended January 31, 2013. That $238.7 million figure represents 47.53% of SoundExchange’s total royalty revenues ($502.2 million) in 2012. [NOTE: Because SoundExchange uses the calendar year for accounting purposes while Pandora uses a fiscal year that ends January 31, this estimate may be slightly off. Using an alternative method that attempts to estimate Pandora’s revenues for the calendar (instead of fiscal) year likely yields a higher percentage – just about 50% – in term of Pandora’s share of SoundExchange’s total collections for 2012.]
While it appears to be an impressive feat for SoundExchange that its royalty collections increased in 2012 by $130 million, it is important to note that Pandora’s royalty payments to SoundExchange also increased in 2012 by about $132 million – i.e., $136.3 million in FY2012 vs. $238.7 million in FY2013. Therefore, ALL of SoundExchange’s increased revenues for 2012 can be attributed solely to increase in royalties paid by Pandora. Another interesting fact: Pandora paid nearly as much in royalties for its FY 2013 (i.e., $238.7 million) as it made in total revenues for the previous year (i.e., $274.3 million for FY 2012).
Pandora clearly represents a large share of SoundExchange’s business and, more broadly, the total streaming royalty revenue collected in the U.S. (which was estimated to be $1.032 billion in 2012 according to a recent report by RIAA). As such, Pandora’s market share has important implications for the upcoming royalty rate negotiations and proceedings, known as Webcasting IV, which will commence in January 2014 before the Copyright Royalty Board. With Pandora’s ever-surging listening hours and royalty payments, SoundExchange (as well as the record labels and artists who split the royalties collected by SoundExchange) need a healthy Pandora as much as Pandora needs a reasonable Pureplay-like rate for the next royalty term (2016-2020).
There are several other semi-interesting tidbits from SoundExchange’s Annual Report, including its continued increase in headcount over the past few years (55 employees in 2010, 72 employees in 2011, and now 97 employees in 2012) – probably necessary to process those whopping monthly checks from Pandora! However, despite the additional headcount, SoundExchange has successfully lowered its administrative rate over the past several years (6.7% in 2010, 5.3% in 2011, and 5.0% in 2012), indicating increased efficiencies by SoundExchange in collecting, processing and distributing the royalties over the years.
 SoundExchange collects statutory royalties from many different types of services – including noninteractive Internet radio (Pandora, etc.), satellite (Sirius XM), cable subscription services (Music Choice), and business establishment services (DMX). Therefore, this 47.53% figure certainly would be much higher – I’d bet close to 75% – if you look only at SoundExchange’s Internet radio revenues, which are not separately broken out in SoundExchange’s Annual Report.
The views expressed in this article are solely Mr. MacDonald’s and should not be attributed to his employer or clients.
RAIN Summit West this Sunday in at the Las Vegas Hotel will host a panel discussion called The Song Plays On, a discussion of royalty issues, including Brad Prendergrast, SoundExchange; David Levin, BMI; Artist Patrick Laird, Break of Reality; Rusty Hodge, Soma fm; Ted Cohen, TAG Strategic; and moderator David Oxenford, WBKLaw. Hope to see you there!
Forty Five percent of Americans now listen to online radio occasionally, at least once a month, according to the newly updated Infinite Dial Study by Arbitron and Edison Research. That translates to 120 million Americans, and it’s a number that grew 6% over last year. The weekly number – Americans that listened to online radio weekly – grew 4% to 33% and roughly 86 million.
What’s more, those weekly listeners reported spending an average of 12 hours a week listening to radio online. Arbitron defines online radio as listening to AM/FM radio stations online and/or listening to audio content available only on the Internet – a definition that I concur with, since I think that’s how consumers define it.
But here’s the big news of the study: Consumers reported spending more than two hours more listening online than they did a year ago! Weekly listeners spend an average of 12 hours a week listening to online radio, versus close to ten hours last year.
The Infinite Dial Study is the best comprehensive snapshot of the growth of online listening. Arbitron and Edison Research have been updating this yearly study for more than ten years, providing the industry with cold hard data chronicling the growth of listening online. Arbitron VP Bill Rose and Edison Research President Larry Rosin will present their study at the upcoming RAIN Summit West on this Sunday April 7th. Hope to see you there!