Category Archives: Revenue Strategies

When Artists Are Responsible For Their Revenue

There’s an article on DMN from about a week ago about a songwriter Ellen Shipley. She’s complaining about the amount of royalties she receives as co-writer of a song that has been played 3 million times on Pandora recently. The problem is, she’s mad at Pandora, when her gripe is really with SoundExchange and the record companies. They’re the ones that decide what happens to the performance royalties that get paid by Pandora, and how they get parsed out to performers versus songwriters and co-songwriters.

I’ll bet someone from her record company called her right up to explain that to her..

There’s been a line of artists complaining recently about the paltry amounts of money they are receiving from Pandora and other streaming services, prompted by the proposed Internet Radio Fairness Act. I’ve written about that, and would like to leave that debate to one side for the moment and talk more about the responsibility that the musician has to become their own business, and take responsibility for their own income, especially if they are unhappy with the size of the checks that are arriving in the mail.

I started thinking about this after I read an article on NPR’s blog about some musicians that are promoting themselves and getting paid for their performances on Kickstarter and similar platforms. Singer and performer Amanda Palmer was one of the first to use Kickstarter and raised over a million dollars for her new album. Other bands, like A House For Lions, produced a video, as well as t-shirts and other promotional items that they sell online through Ignition Deck. It’s a lot of work, but they consider it part of their business.

Artists like Amanda Palmer and A House For Lions aren’t just sitting around waiting for their check to arrive in the mail, and then complaining about it. They are managing their businesses which happen to be music and asking their audiences to pay for their product which happens to be songs. Here’s the video that A House For Lions made to promote their album and ask their fans to donate:

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Abacast Announces Seamless Ad Insertion Patent

A few months back Saga Communications made news by shutting down some of their stations’ streams, claiming one of the reasons was that the quality of their streaming content was compromised by imperfect streaming technology. There was some debate by various pundits and publications, and I weighed in with my opinion too, which was that simply using ad-insertion to cover over the air ads with streaming ads and public service announcements was not compelling programming, and probably was not going to contribute to the growth of a station’s streaming audience.

Now, Abacast, a content delivery network that sells streaming technology, bandwidth and associated services to broadcasters, has announced that they are waiting to be awarded a patent that will cover the replacement of ads with ads and additional content types such as songs in radio streams.

“We are pleased that the USPTO has recognized our innovation in this area,” said Rob Green, CEO of Abacast. “Broadcasters need the flexibility to dynamically serve a variety of content types, including ads and songs, to their Internet audience in place of their broadcast advertisements.”

Called Dynamic Ad Insertion, the system produces a seamless stream,  and allows for the broadcast ad to be replaced with ads, songs, and other Internet-specific content and is inclusive of mobile devices and tablets, in addition to PCs.

Rdio Takes a New Approach to Growing Audience

Image representing Rdio as depicted in CrunchBase

In an interesting approach to growing their audience, Rdio has launched a new “Artist Program” which rewards recording artists for bringing new listeners to the service. From their blog: “We’re committed to supporting the artist community and the music industry as a whole. That’s why today we’re launching the Rdio Artist Program — the first program of its kind, offering an innovative new model for artists to directly earn money from streaming music.”

The Rdio Artist Program encourages artists to create their own pages by uploading photos and connecting Twitter accounts. They can then share their music (if they upload their own content, they also agree to grant Rdio a royalty free use of that content.) Artists get ten bucks for each listener that signs up for a paid subscription (and maintains it for a certain period of time). Subscriptions cost ten bucks a month if you want access on your mobile device.

Kudos to Rdio for taking a new approach to gaining listeners that tries to engage them through the artists that they are passionate about. They report thatScissor SistersSnoop Lion (aka Snoop Dogg), ChromeoA-Trak and Brendan Benson — already fans of Rdio — are among the first artists to join the program.

For that matter, why limit this kind of thing to recording artists? Why not let anyone who is passionate about music create their own page, tweet about it, and make ten bucks when their friends sign up?

Politically Correct Pandora

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.

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“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

Ad Messaging Is a Problem for Simulcasted Streams

An excellent discussion of best practices for broadcasters to stream their programming has arisen out of Saga’s announcement that they would stop inserting different commercials online and instead stream entire simulcasts of their over the air stations. The main reason they offered for doing that was that ad insertion technology does not sound good on the air – sound levels vary, stop set timing is often poor, and the spots that are inserted are often filler content like psa’s.

And all of that is true – stations that simply try to plug in ad insertion technology and let a series of psa’s and commercials cover their over the air stopsets do sound pretty bad. Unfortunately for small stations without budgets and staff to dedicate to the production of a good sounding online station, it takes more effort than that to produce a good sounding station.

But there is a big risk with simulcasting an over the air signal online, one which could really start to affect the perceived value of the product. I’m talking a10070040
bout the ads. You know, those over the air ads that encourage the listener to call right now, or drive right in. Those ads are misfits on an online station. Do you think anyone that is listening to a station online is going to call an advertiser? Of course not. Online listeners are online and every commercial should have an online call to action. Ignoring that and using over the air commercials is simply ignoring the technology. 

Radio’s big opportunity in online radio lies specifically in its ability to target and track ads. To compete with other media that have similar abilities. Sure, it’s not plug and play — every advertiser needs an ad with an online call to action and an on screen clickable display banner or link. Even better — support those ads with an advertiser directory on your website where listeners can get more information, print coupons, register for offers. Integrate your online offerings to increase the benefits to your advertisers.

A decision to simulcast your over the air programming is as good as a decision to stop streaming if you ask me. In fact, I might even say that if that’s your approach you might as well shut it off. No reason you can’t change your mind down the road..

A Small Market Broadcaster’s Streaming Saga Continues

Saga Communications' logo

Saga Communications’ logo (Photo credit: Wikipedia)

After announcing that they were going to stop streaming their broadcast content in smaller markets earlier this summer, Saga Communications is now announcing that they will move to complete simulcasts of their over the air broadcasts – including commercials – on the streams of all their stations. In extensive coverage of this story this morning in Inside Radio, Saga EVP Warren Lada says that the size of the streaming audiences of his stations is too small to be sold separately.

“I was uncomfortable with it because I don’t believe we are doing a service to our advertisers when we tell them that they’re going to get meaningful results from a relatively miniscule audience on a station’s internet stream — that’s disingenuous and not good for the industry,” Lada says. “It’s time for the industry to man up and recognize that primarily most of our audience is on-air and we should just include the stream with it — it’s just part of what we do.”

Other folks disagree — Triton Digital COO Mike Agovino, Targetspot CEO Eyal Goldwerger and Katz360 President Brian Benedik pointed to the higher value of trackable, targeted impressions as good reasons not to abandon efforts to sell digital ads.

Another factor that likely contributed to Saga’s decision is Arbitron’s stance on measuring a station’s streaming stations – unless they are 100% simulcast of the broadcast they cannot be merged.

Saga has long been a skeptic of streaming, finding it difficult to justify the expense and measure the value of it. Like many small market broadcasters, they don’t have a lot of resources to dedicate to growing the online future of radio without seeing any revenue benefits. And what’s to stop them from reversing this position somewhere down the line? The reality is that simulcasts with inserted online ads, as Lada points out, don’t make for great listening. And building expanded online offerings that would attract more audience takes investment. So the question remains – is streaming an opportunity or an expense?

Pandora Expands Local Sales Clout With Partners

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.

Samsung Is In the Streaming Business

Device manufacturers are buying up streaming services, creating an interesting angle in the formula for success in the online audio marketplace. In March HTC bought MOG, now Samsung has picked up mSpot and relaunched it as Music Hub, a music store, locker and streaming service for their Galaxy phone. The service launched in Germany, France, Spain, Italy and the UK, and is not yet available in the US.

The service will be offered in both free and premium versions to owners of the new Galaxy S3. By the looks of it, it will try to get users to replace iTunes, Spotify and other streaming services with a one stop “hub” that offers 19 million songs in its catalog. Users can preview, purchase and download songs, store them in their locker, and play them back from their device or other devices or PCs. They can also stream personalized radio channels, get recommendations, build playlists and listen on-demand if they pay the subscription price of 9.99 euros or pounds.

While there is no word on why the service is not yet available in the US, it’s easy to suspect that there are licensing negotiations going on. and on.

There’s definitely a marketplace out there among device manufacturers for comprehensive streaming services that might be struggling to monetize given their enormous “content acquisition” fees. Mobile device manufacturers know that their customers want to stream content, and they are eager to offer it in a proprietary fashion to enhance the attractiveness of their brand. Dedicated lockers with lots of songs in them create long term relationships with customers, so the cost of acquiring the content and offering the service becomes part of the expense of acquiring and retaining customers. Ads, if they decide to sell them, are gravy rather than bread and butter.

Sirius XM Is The Elephant In the Room

Sirius XM grew their subscriber base by 8% last year – from 20.6 million subscribers to 22.3 million. First quarter 2012 revenue meanwhile grew at an even more impressive rate of 11% to $805 million. That puts them ahead of the largest broadcaster Clear Channel Radio‘s $672 million. For this year, they are forecasting revenue of $3.3 billion, compared to Clear Channel Radio’s $3.0 billion.

English: Elephant in the room

What’s even more impressive is the way they are monetizing their listener base. They make close to $138 per listener/subscriber per year against Clear Channel’s $12.55 (and Pandora‘s $5.84). Sirius XM sure makes the subscription model look attractive. In fact, they have the same number of subscribers as Comcast. They’re projecting household penetration of 13% by the end of this year.

Meanwhile, as I have mentioned before, Sirius XM continues to expand their offerings online. They recently announced a suite of enhancements for their online offering that will allow listeners to pause, rewind and skip, start shows and songs at the beginning, set alerts and record programming. These features will give Sirius XM listeners a highly interactive online listening experience. They’re also redesigning their player and rolling out new mobile device apps.

Sirius XM’s subscriber base is huge, and their ability to monetize it is impressive. While lots of media attention is focused on Pandora, Spotify, Clear Channel and others, when it comes to assessing the new audio marketplace, Sirius XM is the elephant in the room…

Spot Radio Revenue Stands Still While Digital Surges

Broadcast radio revenues grew 1% in the first quarter of 2012, with revenues derived from digital assets at the helm, according to the Radio Advertising Bureau. Digital revenues for broadcasters grew 10% during the same period, or ten times as fast as spot revenue. Network revenues grew 8% and fueled the growth as well.

“While advertisers continue to capitalize on Radio’s Spot and Network efficiencies, they’re increasingly utilizing local digital capabilities and audience engagement that this medium affords.” said Erica Farber, the newly appointed President and CEO of the Radio Advertising Bureau.

Digital revenue now accounts for more than 4% of radio’s overall revenue. Digital revenue grew 15% in 2011, while spot radio lost 1% and network grew 3%. Digital Revenue is made up of activity generated by websites, Internet/web streaming and HD Radio.

So if you were a car dealer that sold ten times as many efficient hybrid cars as you did station wagons, you’d order more hybrid cars for your lot, right? You’d train your salespeople in the best ways to sell hybrid cars, and you would make sure that everyone knew you had a lot of them. In fact, you would move them right up to the front of your lot. That’s the way broadcasters should be looking at their online and digital products. As the engine that is driving their future…

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