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Last Year’s Biggest Story

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Last year was quite a year for Internet radio and related streaming music services, and judging from some of the end of the year activity, this year should be lots of fun as well. I took the week between Christmas and New Year’s off, so here’s my just-a-little-late 2011 recap, summed up in what I think were the stories of the year.

1. Pandora went public. They raised $234.9 million in their public offering in June, selling 14.7 million shares at $16. The stock has struggled to regain that kind of price since then, but the service continues to gain listeners, ending the year with well over 100 million registered listeners.

2. Spotify launched in the US. While they would have liked to get their ducks in a row and have launched before Pandora’s public offering, Spotify did launch in July. Europe’s most popular streaming service began serving US listeners and gaining great attention with mobile apps, on-demand and programmed offerings.

3. Facebook made friends with streaming platforms. In September at its f8 developer conference, facebook announced that it would integrate third party streaming music apps into its platform, opening up the gates for those services to gain listeners as folks listen and like songs and share them with their network of friends.

4. iHeartradio revamped and relaunched. The all new iHeartradio includes all the streams offered online by Clear Channel stations as well as streaming channels. Other broadcasters are offering their programming through the platform as well – including Univision, Cumulus/Citadel/ABC, and EMF. These changes signal Clear Channel’s intention that iHeartradio become a portal to streaming broadcast stations.

5. Digital trendspotter and investment analyst Mary Meeker predicts that online audio is the next big thing.

Those are the five things that I think were the biggest stories in online radio in 2011. I think the real story is a combination of all of them – an investment friendly marketplace with increasing competition and opportunities. What do you think?..

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Facebook Users Like Streaming Music

When facebook introduced its music discovery platform with a list of streaming partners at its f8 developers conference in September, we knew there would be some big winners among the partnering services. Now, from a post on facebook’s own developer blog we learn that since that announcement on September 22nd, facebook users have shared songs 1.5 billion times using those services integrated apps. 

Facebook wanted to integrate music sharing and discovery and make it a more meaningful part of the facebook experience. It’s certainly been that for their partner services, which have experienced growth ranging from doubling their active users to increasing their user base 2 – 10 times.

Here’s a list of highlights, pulled from the post, of the growth some of the services have seen:

  • Spotify: Already one of the defining social music apps on the web, they expanded to the US this summer and added well over 4 million new users since f8.
  • Earbits: Y Combinator-funded startup built by a team of musicians saw a 1350 percent increase in the number of users becoming fans of the band they’re listening to.
  • MOG: Their uniquely social business model has led to a 246 percent growth in Facebook users since f8.
  • Rdio: Their strong social ecosystem has expanded with a 30x increase in new user registrations from Facebook.
  • Slacker: Available across mobile, TV, auto and web, Slacker saw a more than 11x increase in monthly active users in the month following f8.
  • Deezer: Based in France, they’ve added more than 10,000 users per day since finalizing their Open Graph integration.
There is no mention of iHeartRadio, Clear Channel’s streaming portal, which is also a partner. There’s also no mention of Pandora because they are not a partner in this integration with facebook, although they do offer their users the ability to share music on facebook through their own interface.
Elevated status in the facebook platform is not without cost – those services have to force listeners to have a facebook account in order to join. Spotify and iHeartRadio, among others, have taken some flack for this twist, and this is likely the thing that kept Pandora on the sidelines. But it appears there are already big winners in facebook’s new streamed song sharing platform, despite the high cost to services who decided to play..

Nearly 1 in 10 Smartphone Users Listen to Pandora Daily

Mobile is changing the way we do things, and smartphones are changing the way we do mobile. Smartphone ownership has tripled since 2009 – close to a third of Americans 12+ own a smartphone.

What’s really interesting to note is what smartphoners are doing with their devices. According to the new Arbitron/Edison Infinite Dial Study, 40% browse the Internet several times a day or more. 14% play games. 8% watch video. 8% listen to Pandora. While the most popular activity remains talking on the phone, texting is gaining fast, and other activites are growing.

Folks are looking for ways to use their smartphones and platforms that are well suited are the big winners. 27% of smartphoners use social media sites like Facebook and Twitter, a number that jumped 34% in a year. Sites and activities that are well positioned in the mobile game are winning audience big time: Facebook, YouTube, Pandora, Twitter.

The media landscape is changing. Mobile, and in particular smartphone usage is revolutionizing media delivery, use and expectations. And the pace of change is phenomenal. Are you thinking about ways to make mobile happen for your platform?

Radio Isn’t Pandora and Pandora Isn’t Radio

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Streaming music platforms are getting a lot of attention lately. Pandora’s been growing its audience at an impressive rate, MOG, rdio and others are getting funding, former radio personalities are showing up on Internet radio, and lots of folks are talking about it.

It’s a groundswell that started, like many do, as a teeny tiny trend that many folks said would never take off. Back in 2003 when I started Net Radio Sales (now Katz360), the other guys were starting RL Radio (now Targetspot). Arbitron was shutting down its streaming measurement platform (called Measurecast). And revenue was tough to come by.

That’s not the case anymore. Investment money is flowing into online music platforms, and Pandora recently announced a plan for an IPO to raise $100 million. Audiences are growing fast. Targetspot recently told Inside Radio that their revenues were up 75% over last year. The future looks bright and getting brighter.

But all of this seems to have thrown radio broadcasters off of their game. Instead of focusing on their core competencies, they can’t take their eyes off of Pandora or Slacker, or another streaming music platform. Don’t get me wrong, there’s lots to like about those platforms. They can deliver unique personalized streams and targeted ads to registered listeners, and that’s a great thing.

But they aren’t a replacement for broadcast radio. They’re not local and their not personable. They’re not…human.

In developing their online streaming presence, Radio broadcasters should focus on the human aspects of their programming. Concentrate on talent, news, and excellent programming. Not programming for the highest cume, but for the happiest and most engaged listeners. Interact with those listeners in meaningful ways, and give them ways to interact with the station and each other. Create fun and interesting blogs, side channels, Twitter feeds, Facebook pages that listeners can love. And please, register those users.

Stop thinking about what Pandora is and trying to be that, instead think about what they aren’t and play that card…

Internet Radios Driving Auto Aftermarket Sales Increases

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Car stereo aftermarket sales rose in 2010 for the first time in a long time, thanks in part to Internet radio. Twice magazine says that new technologies such as Internet radios are the stimulus behind the more than 11% increase in automotive audio aftermarket sales.

There are several new technologies that have consumers excited – in addition to Internet radio, younger demo car buyers want touchscreens that enable iPod/iTouch integration and Facebook connectivity.

Manufacturers such as are excited – and they expect sales to continue to grow in 2011. The domino effect should be an increase in spending on car audio, which will boost awareness of the new devices even further. And what better place to advertise those connected devices than on the Internet radio stations themselves…

Forrester Studies Online Behavior

Last week Forrester Research released a new study Understanding the Changing Needs of the US Online Consumer 2010. It’s a deep survey that interviewed more than 30,000 US consumers about their media habits. Highlights include:

  • High speed Internet connections are the norm, with 91% of the population connecting online through broadband.
  • Time spend with TV and Internet are now equal. Americans spend an average of 13 hours per week on each. Time spent with the Internet is up 121% since 2005.
  • Time spent with radio (not online), newspapers and magazines is dropping.

The study looked at a variety of online behavior and categorized certain activities as “mass appeal” or not. After email use, which has been adopted by 90+% of the population, shopping online is the most widely popular online activity – in 2007 about one-third of the population was doing so, by this 2010 study more than 60% of respondents shop online . Social networking is the next most popular activity reaching 62 million US Adults. Other activities such as blogging, listening to streaming audio, and IMing are engaging less than one third of the population and will never be mass appeal, according to the study.

Although the study also notes the growing popularity of Internet use with texting and email leading the list of popular activities.  Interestingly, despite the fact that listening to music online was basically sidelined by the study as an activity that will never be mass appeal, this chart shows that mobile online listening to music doubled its audience 2007 to 2008 and again 2008 to 2009. Only social networking equaled that rapid growth.

 

Forrester Research

 

 

Spotify’s Bad Idea

Spotify, the hugely popular European on-demand streaming service that has yet to launch in the US has Sean Parker as a new investor. The notorious founder of Napster (the illegal one). Parker – the guy brought to life on the big screen by Justin Timberlake in the movie The Social Network – is out to finish what he started with Napster, and ‘fix what he broke’.

Until I heard this I was actually betting on Spotify. But Sean Parker is probably the single worst thing that ever happened to digital music. I think they have misjudged the US market. They’re in negotiations with the record labels, and have had to push back their US launch several times because they can’t get a deal, and now they’re letting Parker talk for them?

If Parker didn’t actually create music piracy, he certainly made it popular and famous.

If you want to get a taste of what an appealing spokesperson Sean Parker makes for Spotify, take a look at this video. In it, he discusses the war on piracy as a failure, and explains why Spotify’s on-demand subscription service will succeed. And I ask you, would you buy anything from him?

What on earth is Spotify thinking?

Best Buy’s New Internet Radio Device

I’m a fan of Chumby – mainly because of its name. Chumbys are tabletop internet radios and a lot more – they’re actually tabletop internet ready devices, designed to be a digital photo frame and alarm clock that also allows you to listen online, check news and weather, watch videos, play games.

Last year Sony licensed their unique dashboard for its Sony Dash. Now Best Buy has a new device – the Infocast – which uses the Chumby dashboard as well. Its on Best Buy’s house label Insignia, sells for $169, and would make a downright smart conversation starter on the desks of Internet radio executives. It looks more than a little like an iPad if you ask me.

The Infocast has an 8 inch touchscreen that is larger than the Chumby or Sony Dash screens. It has access to Pandora and Shoutcast, New York Times, Facebook, YouTube, Twitter and Photobucket. It even has a sharing feature that enables folks to share apps, photos and more with friends that have similar devices.

CNET calls it a best of breed, and I’m thinking it sounds like a winner for tech savvy family members this Christmas.

Jacobs Media: Pandora’s A Threat To Broadcasters

In the Internet radio game, Pandora’s the one to beat. So says Jacobs Media’s new Tech Survey of 26,000 rock radio listeners in the US. According to Fred Jacobs, President of Jacobs Media, Pandora is “a threat to terrestrial radio.”

The study finds that within the pool of surveyed people who listen to Internet radio, 37% tune in Pandora. 43% of Pandora listeners are tuning in more often, meaning the service has momentum as well (15% are listening less). More than half of Pandora listeners like it more than terrestrial radio while only 5% like it less.

While many Pandora listeners had no complaints (37%), some listeners did. Gripes about the service included not allowing them to skip enough songs (hardly a complaint that terrestrial stations can take to heart). But one out of every five listeners also misses hearing real people and local info – something that terrestrial stations should take note of.

Pandora is emerging as the leader in the online music game in much the same way that Facebook and YouTube have dominated their spaces, says Jacobs. It’s true – at least in the US, which is the only place that listeners can hear Pandora. In other parts of the world, services like Spotify have had lots of time to build their brands. Facebook and YouTube both have global audiences.

With the new Facebook Open Graph feature, lots more listeners will be hearing about Pandora – earlier this week I noted that their integration into Facebook will be much bigger than the iPhone was for helping them to build awareness. But Facebook’s 400 million users are spread out all over the world. I’m guessing it won’t take long for Pandora to open up streams to folks in other parts of the world as well.

So what does this all mean for streaming broadcasters and smaller online stations? In addition to building their brand, Pandora is building awareness and fondness for Internet radio and connected listening. They’ve done more to build audience for Internet radio than anyone else, both on a desktop and even more so on mobile devices. They’re the face of Internet radio – as I said early and say often, they are the Kleenex of the industry. There’s plenty of ways for other services to focus on their audience and develop best ways to give them what they want. As a brand leader, Pandora is a good service. Others should sharpen their swords and aspire to make their offerings as popular with their own audiences…

Pandora Gets Social With Facebook

Last week Facebook implemented a new phase of integrations with other sites that allow people to share things they like on their favorite sites throughout their Facebook network. The “Open Graph” is Facebook’s new game, and Internet radio darling Pandora is a big winner in it.

“Pandora is mapping out the part of the graph that relates to music,” said Facebook CEO Mark Zuckerberg during his announcement this week. “If we can take these separate maps of the graph and pull them all together, then we can create a Web that’s smarter, more social, more personalized

Listen to Pandora CTO Tom Conrad in this interview with Robert Scoble as he explains how Facebook came to them several months ago and offered a glimpse of their next phase in order to engage Pandora in becoming a launch partner.

What’s so cool about this, says Conrad, is that Pandora was already personalized and easy – “one button, you lean back and you’re done”  he says. Now, as songs are playing, friends who like the same music will pop up on your screen where you can see what stations they like and what songs they have bookmarked, even leave messages for your friends.

It’s a way to make Pandora more social right within the product. Until now, notes Conrad, Pandora’s been social because people talk about it – sharing songs and bands they found on Pandora over drinks or Thanksgiving dinner.

With 400 million users, Facebook is the social internet. The Open Graph, as this new integration is called, puts them at the center of the web’s social infrastructure. I think this is a huge step that will spur even more exponential growth for Pandora. A couple of years ago (almost) the launch of iPhone spurred millions of Pandora app downloads and a huge jump in awareness of the music service as well as Internet radio. I think this is bigger than that…

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