Pandora is certainly one of the most listened to Internet radio services in the US and possibly beyond. Their interactive service enables listeners to build channels around their preferences, share music and listen on many mobile devices. With millions of registered listeners, they have a lot of data about those listeners – age, gender and location, as well as what types of music and artists they prefer.
The data Pandora has on listening preferences is of course valuable stuff to advertisers, and Pandora has been doing a pretty good job of selling unique music sponsorships to key advertisers. Last year Pandora worked with The Dave Matthews Band to debut his new album “Big Whiskey and the Groogrux King”. They streamed the album for a week before it actually was released, built a special landing page for the debut, and sent a message to every registered Pandora user who had either signed up for a Dave Matthews channel, or had given a DM song the Pandora “thumbs up”.
According to Reuters, the promotion resulted in more than half a million streams, with 8,000 linking through to buy the album on iTunes. Pandora gets the revenue share from all those downloads. They sold the sponsorship to Brita for an undisclosed amount.
Later in the year Pandora offered John Mayer fans a couple of video interviews, along with a customized playlist of his favorite songs. AT&T bought a sponsorship of the promotion which netted 81 million impressions. Since then, Pandora has launched or pitched a bunch of other similar offerings from prelaunch listening opps, to video interviews and/or artists’ custom music lists – for big name artists like Jack Johnson, Jewel, Miley Cyrus, Switchfoot, Miranda Lambert, the Walkmen, Mason Jennings and Rogue Wave.
Relevant, rare offerings for listeners; valuable, targeted marketing opportunities for artists. Sounds like a great strategy for engaging advertisers and building revenue…
AT&T has launched a new mobile music platform that delivers “song and album downloads, streaming radio, song match, lyric search and an enhanced music player – into a single, cohesive experience for AT&T mobile phones.” AT&T will charge customers $6.99 a month on top of a data plan fee, with song and album purchases charged a la carte.
The service will extend streaming music capabilities to “quick messaging phones”, also sometimes called feature phones, or non-smartphones. It’s currently available on three popular devices – LG Xenon, Samsung Solstice and Samsung Impression. It will soon be available for downloads on other phones and AT&T will begin pre-loading it on new devices this summer.
AT&T has clearly identified streaming music as a popular application for mobile devices, and created this platform to offer customers who are not using smartphones those capabilities. I’m sure they’re hoping those customers will see a good reason to purchase unlimited data plans so they can stream.
Meanwhile, Nielsen recently reported that smartphones will overtake other mobile devices by the end of next year as more and more customers choose to upgrade. The use of Wi-Fi increases from 5% for feature phone owners to 50% for smartphone users because smartphones give users more ways to utilize a broadband connection. Now AT&T has created a platform that enables feature phone customers with some of those capabilities.
Meanwhile, it’s all a good thing for the growing Internet radio audience…
AT&T, faced with complaints about its coverage area, is blaming it on users that stream audio and video on their smartphones, and indicating that they may move to restrain heavy users from unlimited streaming.
Last week, at UBS Global Media and Communications Conference in New York City, AT&T head of consumer services Ralph De La Vega told investors that 3 percent of smartphone users are consuming 40 percent of the network capacity, and that the most high-bandwidth activity is video and audio streaming.
AT&T has taken lots of criticism for the broadband coverage offered by their network, and is locked in an advertising war with Verizon over the same. Apparently, they think the solution is to penalize their heaviest users.
AT&T has sold many iPhones and data plans on the excitement of unlimited untethered streaming activity. I know my husband cancelled his subscription to satellite radio, upgraded to an iPhone and data plan, and started listening to Pandora in his car. Now, AT&T customers like him that bought the phone and the data plan, and are getting the most enjoyment out of it, may be limited.
My point is this. Internet radio and Pandora in particular have witnessed great audience growth as a result of smartphones and wireless broadband connectivity. AT&T built a customer base in part around that. People didn’t buy iPhones because they want to talk on them – they bought them to do all the other stuff…including streaming music.
The impact of streaming on AT&T’s network cannot be coming as a surprise to the company, which has been promoting Pandora and streaming radio to its customers since 2007 when they were using Pandora to sell MEdia Max bundles for $19.99 a month. There’s a name for this way of selling your products to consumers, it’s called Bait and Switch, and it’s a bad business strategy for AT&T…
Vevo, the music video site powered by Youtube launches today. The site will feature videos from three of the four major record labels – Sony, Universal and EMI. Warner Music Group is the only one not working with Vevo, although they are working with YouTube.
Professionally produced music videos are the most popular content viewed on YouTube. Now Vevo will offer music fans music video content, along with an online music store offering music downloads, merchandise created by artists, concert tickets and more. In the future a music video subscription service, offering both short videos as well as streamed concerts is likely to be added.
Vevo has announced a pre-launch partnership with CBS Interactive and will offer extensive music programming from the vaults of the CBS Interactive Music Group’s properties including Last.fm and more than 90 CBS RADIO music stations beginning next year. “Last.fm and CBS RADIO’s stations are producing a tremendous amount of unique video content every day – from long form concerts such as the “Live on Letterman” webcast series and annual special events, to acoustic performances and one on one interviews,” says David Goodman, President of CBS Interactive Music Group. “We’re excited to be part of the next generation of music video services, and look forward to all the benefits that go along with Vevo’s massive audience and reach including increased awareness of our efforts in this space to new revenue generating opportunities.”
The combination of high quality video along with lyrics and access to lots of information on favorite artists is expected to appeal to advertisers and command top dollars. The site will launch with partnerships with AT&T, McDonalds and Mastercard.