Pandora hosted a 2Q earnings call last week, giving investors news of increased listening and revenues, and continued disappointing profits. The highlight of the call was the news that mobile ad revenues are up 92% over last year, with Pandora now claiming to be the third largest generator of mobile ad revenues in the US, behind Google and Facebook.
Other big news included the fact that just months after a move to cap listening at 40 hours per month, Pandora is removing that cap. No doubt, this decision has to do with the impact that move had – Pandora’s numbers dipped about 10% this spring after the cap was instituted, and at least one competitor, Slacker, saw simultaneous growth. Meanwhile, it did appear that the cap spurred subscription sales as well – although whether those subscribers will stick now that the cap is lifted remains to be seen. Non-GAAP subscription and other revenue was $33.5 million for the quarter, a 153% year-over-year increase, including $4.7 million in revenue relating to our subscription return reserve which has to be held separately since they collect the fees upfront, but subscribers may cancel for a refund.
Advertising revenue was $128.5 million, a 44% year-over-year increase for the quarter.
Pandora also announced that they will for the first time be running back to back ads in listener’s streams, increasing the potential number of ads a listener can hear from about 4 per hour to 5. Since these are mainly 30 second ads, the ad minutes may climb to 3 minutes per hour.
My take on the listener hour cap and commercial units per hour tweaking is that Pandora is growing up and turning its attention more to profitability. They’re demonstrating a willingness to try different things in their attempt to make money per listener. The fact that they are connected to identified listeners gives them the ability to watch their tweaks closely, and they are obviously not afraid to change course if they don’t like what they see. And since they are a public company, these are experiments that the entire industry can watch and learn from..
Are you coming to RAIN Summit Orlando on Tuesday September 17th? Join attendees and speakers from Pandora, Slacker, iHeartRadio, TuneIn, Spotify, Univision, Greater Media and so many more for a great conference with excellent panels and networking. Click here to register, and use the code Audio4cast to save a bit.
- Pandora Shows That A Media Business Can Grow Around Mobile Ads (businessinsider.com)
- Pandora scraps 40-hour mobile limit ahead of iTunes Radio launch (digitaltrends.com)
Innovative technology for connective cars continues, this week Pioneer Electronics debuted a new line-up of in-dash receivers that offer bluetooth and usb connectivity for Androids and iPhones. These affordable, aftermarket products make it even easier for consumers to connect and listen to streaming audio in their car, featuring Siri technology for voice commands, simplified Bluetooth connectivity for hands-free calling and audio streaming, enhanced playback compatibility, and Pandora internet radio.
“The smartphone has become a part of most consumers’ lifestyles and a source of both entertainment and communication,” said Ted Cardenas, vice president of marketing for the Car Electronics Division of Pioneer Electronics (USA) Inc. “Pioneer’s new CD receivers provide various means for integrating a variety of smartphones into the vehicle.”
At prices starting at $90. That sounds like a pretty affordable price point to me.
Pandora continues to lead the pack of services that come integrated into the new offerings, they recently announced that they are now integrated with more than 100 car models and 23 manufacturers. That doesn’t mean other services are unavailable – just that Pandora is front and center as the featured service in the car. Mazda recently integrated Pandora into its 2014 Mazda6, incorporating voice commands that make listening while driving very easy and fun.
Pioneer Electronics Ted Cardenas and Pandora’s Director of Automotive Business Development Geoff Snyder will join a panel discussion at RAIN Summit Orlando on Dashboard Integration. Other panelists include Ford’s Global Lead, Business Development and Partner Management Scott Burnell, Slacker SVP Steve Cotter, and TuneIn VP Kevin Straley.
RAIN Summit Orlando takes place Tuesday September 17 starting at noon and finishing with a cocktail reception in the evening. Register here, and use the code Audio4cast to save a few bucks. I hope to see you there!
Digital revenue is the bright spot for radio according to the newest revenue data out late last Friday from the Radio Advertising Bureau. Digital revenues grew 16% over last year’s second quarter and are up 13% for the year. Serious attrition continues for network dollars which are down 4% for 2Q and the year. Digital is now poised to overtake network’s share of radio’s revenue pie.
The big elephant in the room is spot radio, which was only flat for the quarter but is still off 1% for the year. Of course this is not a good trend in the face of a modestly recovering economy. Ad revenues continue to shift to online and mobile media, as evidenced by the growth of radio’s digital revenues.
In a move that is likely a reaction to news like this, Clear Channel, which owns Katz Radio, the sales firm that controls the lion’s share of national spot revenues, has just signed on with IPG, one of the largest ad agencies, to build an automatic buying platform for radio inventory. According to Mediapost, “The initiative, which was developed by Interpublic’s Mediabrands unit, is dubbed the Magna Consortium, and is part of the agency holding company’s mission to automate 50% of its media-buying by 2016.”
More than 70 million folks in the US listen to music on their smartphones, says eMarketer. That number represents about 22% of smartphone users, and includes people who stream from their smartphones or download to their phones and listen at least once a month. By next year more than 25% of the US population will be listening to music with their smartphones.
Advertisers are missing the boat though, according to a blog post based on a new report for sale from Forrester Research. That report by Anthony Mullen says that downloading is a transitional stage for the music and audio industry and that consumers’ personal libraries of mp3s will dwindle as CDs, tapes, and vinyl did before them.” The streaming audio audience is “mushrooming”, with Google, Twitter and iTunes all jumping in in 2013. Meanwhile, in-stream audio advertising is showing signs of going mainstream as well – gaining spots in more and more standard ad campaigns. Streaming audio ads are data-rich, meaning that they enable great targeting and tracking opportunities, but it’s a market that remains under-invested in by advertisers.
In-stream audio advertising offers a great opportunity for advertisers, but it deserves quality creative that recognizes its unique attributes. Educating the ad community on both the benefits of the streaming audio audience, as well as the need for strategies that recognize its unique targeting and ROI abilities is the job at hand for streaming services, and reports like these two from Forrester and eMarketer are good things to have in your toolkit.
There’s a debate raging as to whether Pandora and other streaming services are “radio”. There are a group of broadcasters who want to narrowly define “radio” as a traditional approach to radio – with curated formats and live personalities (and towers). And then there are the upstarts that broaden that description to include other forms of audio. Some of them want to define radio to include themselves, but exclude others – like saying that Internet “radio” includes webcasters like Pandora, where there remains an element of surprise about what song you will hear next – but they want to exclude services like Spotify and Rhapsody where you can design your own playlists.
I say who cares whether it’s radio or not. And here’s why.
It’s all about the consumers. They are deciding what they want to listen to, and what device they will listen on. And they’re not debating whether or not it’s radio. They’re simply selecting the content that is most appealing to them. To them, the debate about whether it’s radio is irrelevant. And so it should be to everyone else. The new generation has no idea which tv stations are broadcast and which ones are cable. They don’t think about it and they don’t care. It’s all tv to them.
There’s an exciting expansion of audio content going on these days as a result of streaming. There’s data to indicate that the amount of time that consumers are spending listening to new forms of audio is not eating into old time spent listening to radio, but rather is expanding time spent listening to all audio content.
Time spent arguing and debating which products are radio would be better spent discussing how the audio industry can grow their share of the revenue pie. And improve relations with the music industry. And discover new and better ways to produce great content. Focus on the content and consumers, that’s all that matters..
Adults in the US spend on average 2 hours and 21 minutes each day on their mobile devices, which is nearly an hour more than they were spending a year ago on them. That’s a number that represents nonvoice activities – so it’s not the time that you and I spend talking on our mobile phones, it’s all the other stuff. Adults now spend almost an hour more per day using their mobile device than they do listening to radio.
The new numbers on Average Time Spent with Major Media by Adults in the US, 2012 from eMarketer are interesting. These numbers are not time spent exclusively with one medium – the adults in the study may well have been, and probably were multi-tasking – spending time with two major media at the same time. While the average time spent with mobile is soaring, the time spent with other media is dropping, but not nearly at the same rate. For example, time spent with radio dropped six minutes from 2011 to 2012 – from 1:32 to 1:26 per day. While that’s nothing to ignore, and it is part of a downward trend, I’m sure you agree with me that it’s not a precipitous drop. The same is true for television, which lost 7 minutes from 2011 to 2012 (but their time spent number is nearly twice that of radio at over 4 hours per day). Print is another story for another day..
This data shows that mobile isn’t gaining much of its time spent by adults by stealing it from other media. Instead, mobile is creating new media usage patterns that appear to be expanding the amount of time that adults in the US spend with media. That expansion probably comes from multi-tasking, with folks using their tablets while watching tv, etc., as well as new time spent with media in places where you hadn’t before.
Now this is interesting. Mobile media is expanding the time that adults in the US spend with media. Creating new dayparts, you could say. A little like making more time in a day..