It’s all but confirmed that mobile phone company HTC will purchase on-demand streaming service MOG via their Beats Electronics high end headphone brand. Which is a very interesting play for the folks at MOG. That service, while interesting, might have been dismissed not very long ago as one that was getting sidelined by other on-demand services like Spotify and even long timer Rhapsody, which recently reinvigorated itself with the purchase of the legal remainder of Napster.
Following in the footsteps of the mobile phone/streaming service pairing between Muve and Cricket, this deal looks like a good one for MOG, which was founded by David Hyman in 2005 and had raised $33 million. MOG reportedly has about half a million users.
HTC, the fifth largest smartphone maker in the world, took a controlling stake in Beats last year. That company is tied in tightly with Universal Music, the largest of the big record labels, which adds yet another interesting twist to this deal.
So MOG, or whatever it becomes, will become an on-demand music source built into a large number of smartphones. Sure – those folks can still subscribe to Spotify or Rhapsody, but if HTC comes with a free service that offers the same thing why would they?
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.
Coldplay released a new album this week and didn’t license subscription services such as Spotify to play it, a strategy that is raising concern for on-demand services. There’s been a debate brewing about the wisdom of offering brand new releases through on-demand subscription services and whether that has an impact on song and album sales.
After withholding their new album Mylo Xyloto from Spotify, Coldplay sold more digital albums that ever before in the UK – something that doesn’t bode well for on-demand services like Spotify. DMN reports that Coldplay sold more than 200,000 units in the UK alone, 40% of which were digital sales. Figures from US sales were not yet available.
Services like Spotify, Rdio, Rhapsody and MOG offer on demand song plays for a monthly subscription fee. But artists have been unhappy with the payouts from these services, and some are removing their new albums, or even their entire catalog from the playlists of some streaming services.
In a story on this topic, CNET quoted artist and indie label owner Sam Rosenthal pointing out that 5000 song plays on Spotify would earn him $6.50. An artist would earn $.20 per song download on iTunes, or $1000 for the same number of song sales.
But does an on demand song play on Spotify replace a song download? That’s a good question and one that no one can really answer. In the CNET article, Jon Irwin of Rhapsody claims that rather than cannibalizing song sales, on demand services are cannibalizing piracy – that inexpensive subscription services appeal to the younger listener who used to download all their music illegally and now pay a monthly fee instead.
Unfortunately, higher song sales for Coldplay after holding back their new album from Spotify doesn’t help on demand services make that point…
Last week was a busy week for Internet radio. Clear Channel shook things up at the beginning of the week with their announcement of the coming “New iHeartRadio”, later in the week Spotify launched its US based service. While I think Spotify’s entrance here is interesting, I don’t think it will have an enormous impact on free streaming radio options.
Spotify’s on-demand service is more competitive with other highly interactive services that are looking to replace personal listening collections. Those include services like MOG, rdio and Rhapsody. Cloud based services that allow a listener to sync their own music files and stream from multiple devices are a competitor to on-demand services as well. Premium Internet radio services, such as Pandora One and Slacker’s premium ad-free option may also be affected, as I think they will compete for the same dollars.
More than 2/3’s of Internet users here in the US have paid for digital/online content already, according to The Pew Internet and American Life Project, 1/3 have paid for digital music online. That information validates the consumer subscription model. But how many different services will the consumer pay for? Probably not more than one or two.
In addition to all the streaming on-demand services competing for digital dollars, there are subscription based podcasts such as Adam Carolla, Bubba The Love Sponge and others. In fact, I think Sirius XM, with its monthly subscription fee, is ultimately competing for the same monthly listening subscription dollars.
The arrival of Spotify, long heralded by themselves, has been anticipated by industry watchers aware of their large listening share in Europe. But the general public is largely unaware of them so far. Interest in earlier Euro based services has been weak – GOOM Radio launched and quickly fizzled, and UK born Last.fm, which CBSRADIO picked up a few years back, has not been able to build a massive following.
It’s an interesting case study from the get go, one that I’m looking forward to tracking..
RAIN Summit West 2011, the largest gathering of Internet radio people and information, will take place on Monday April 11th at the Renaissance Hotel in Las Vegas. This will be the 9th annual event, each year it gets bigger and better, growing in scope and size along with the marketplace. (As a disclaimer I’ll tell you that I’m very involved in organizing it.)
One of the scheduled panels will be a discussion of the future of music, featuring some really smart entrepreneurs in the streaming music space. Michael Robertson, Founder of MP3Tunes is one of streaming music’s true pioneers, having founded MP3.com and sold it to Universal/Vivendi will be on that panel. He will be joined by David Hyman, Founder of on-demand subscription streaming service MOG. Hyman’s past lives include CEO of Gracenote. Eric Johnson is the COO of Wolfgang’s Vault, one of my favorite online streaming places. Ari Shohat‘s Digitally Imported is one of the most listened to online stations, and he’s a sharp entrepreneur as well. The panel will be moderated by TAG Strategic’s Ted Cohen, a past record company executive and well known digital music consultant.
Need more reasons to attend? You can review the full agenda here. To save 20% on standard registration, go here and use the code AUDIO4CAST20. If you’re a broadcaster or webcaster, you don’t even need to use that discount, there’s a special rate of $79 for you. Including lunch and cocktails!
RAIN Summit West is a really great opportunity to meet people, get information and expand your expertise. See you there!
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…
Nielsen Entertainment recently expanded its coverage of music streaming measurement, adding several key streaming platforms to its streaming panel. Newly added services include Vevo, Slacker, MOG, Thumbplay, Akoo, and Cricket. Data from these services, and from the existing reporting panel consisting of AOL, Napster, Rhapsody, Verizon Wireless and Yahoo! will appear in Nielsen’s BDS reports.
Nielsen Entertainment produces reports on lots of activity related to the music industry – Nielsen BDS monitors music played on radio stations in the US, Canada, Europe and Mexico. Nielsen SoundScan reports on physical and digital song sales. They provide lots of insight into things like what songs people listen to and buy, which it sells to radio programmers, record companies, etc. Sources like Billboard produce their reports from this data.
During the first six weeks of 2011, Nielsen tracked more than 1.1 billion music streams through online music streaming services. More than 165 million streams per week are captured and nearly 26 million weekly song downloads are tracked. That is a lot of streaming music activity.
According to their press release, Nielsen is the only company able to provide weekly trending information on streaming activity, as well as a more granular understanding of from where consumers stream music. Nielsen also provides insights on the type of streams; on-demand streams, those songs/videos that consumers choose to listen to, versus programmed streams, or when songs are not chosen by the consumer.
As music streaming activity and digital downloads increase while physical song sales sink, streaming’s importance is growing as an important measure of who is listening to what. I expect we’ll see the list of streaming music platforms in their panel to continue to grow.
On-demand subscription music service MOG has joined the parade of online music platforms that are announcing partnerships with device and automotive manufacturers. Today MOG announced partnerships with LG for televisions and Sonos for home stereo systems. The New York Times reports they are also about to become part of BMW’s Mini lineup, alongside Pandora and others.
MOG will be pre-installed on the devices, and require a subscription. MOG is a subscription based on demand – or cloud – service that enables listening from various mobile devices.
MOG’s Founder and CEO is David Hyman, who will be appearing at RAIN Summit West on April 11th during NAB Show Week in Las Vegas. He’s not shy about his ambitions. “The car is the holy grail,” Mr. Hyman told the NY Times. “I look at the satellite-radio market in America, with 20 million subscribers, and I don’t see why we shouldn’t be 20 million subscribers.”
Pandora is already in a lot of cars, with deals for Ford, Toyota, Mini, and other automotive manufacturers in place. But MOG’s service gives listeners access to a different kind of listening – to songs on demand. Similar to cloud based music streaming services Rhapsody, rdio, and Spotify (which is not yet in the US), MOG is the first of this type of service to announce a deal to get into the dashboard of a major car manufacturer.
But not the last..
Last week we had a couple of good reasons to take a second look at subscription models for streaming music business. First, Last.fm announced that the radio service built into Last.fm mobile apps and on home entertainment devices will become an ad-free, subscriber-only feature on February 15th. It’s not practical, they explained on their blog, to deliver an ad-supported version of their streams on mobile and other connected devices, so they’ll continue to offer an ad supported free version from their website, accessible through your computer, but if you want to listen on other devices you’ll have to pay a monthly subscription fee of $3 per month – the cost of a “fancy coffee.”
Last is not the first (get it?) service to head in this direction – many other services offer ad-free versions of their sites for a small subscription fee. Pandora One, Pandora‘s ad-free version, costs $3 a month as well – although they do offer a free version that is available with mobile devices. It’s working out okay for them – as we saw in Pandora’s recent SEC filing, they have managed to convert a small percentage of their large user base to paying customers, and generated 13.6% of their revenues in the first 3 quarters of last year from subscriptions.
Other services are working the subscription model as well – MOG, rdio, and Rhapsody, who offers unlimited streaming for $10 a month along with the ability to transfer playlists to a device for offline listening.
The Pew Internet and American Life Project reports that 33% of Internet users said they had paid for digital music online – which presumably includes downloads as well as access to premium streamed content. Digital music topped the list of items consumers were most likely to pay for.
Streaming music services have struggled to develop successful business models. CBSRadio, which owns Last.fm, no doubt decided that profitability or the pursuit of that is important enough to implement some changes that will no doubt impact the size of their audience. Can they leverage their brand and audience into a decent size subscriber base? Some early indicators say they just may be able to.
Music consumption is increasing, and this heat map clearly shows where and who has the traffic. In case you thought Pandora was the big boy, let the visual speak for itself – the real elephant in the room is YouTube. 31% of all videos on that site are music now, and it’s the number one music consumption destination on the web – at least according to this info based on data from Compete.
ITunes is not web based and therefore does not qualify for this comparison. Grooveshark, which has been growing audience faster than its been obtaining licenses from big labels, grew traffic 236% in 2010. By comparison, Pandora grew only 116%. Shoutcast grew 180%. AOL Music, Last.fm, Slacker and MOG all grew, as did rdio – by a whopping 3680%. But given that rdio just launched last year, that growth was from nothing to tiny, as the heat map reveals.
There are a lot of other sites on the map that aren’t so much streaming music platforms as they are music download sites, or artist communities, or other types of music platforms. It’s the best snapshot I’ve seen so far of the way that streaming music platforms stack up globally. You can get a better picture, along with mouse over data on each site, and a growth chart, here.