Tag Archives: Spotify

Big Data Is Smart Data For Online Audio

The streaming marketplace is becoming increasingly segmented, with big new brands like iTunes Radio and Beats Music competing with Pandora, iHeartRadio, Spotify, Rdio and a multitude of others for listener’s ears. Many of the streaming services offer similar options – personalized song recommendations based on a listener’s likes and dislikes, playlist building, social features, etc.. Some offer on-demand song plays as well.

Big data – the term used for collections of data that are so big that special processing is needed in order to use it – is a key component of these customized listening features. Services like Pandora, with 200 million registered users, collect information from listeners that includes their age, location, and gender. That basic information is useful for targeted ad campaigns. But there’s a lot more to big data than that – and that’s the stuff that music personalization is made of. Each time you like or dislike a song, skip an artist, type in an artist’s name, that’s more information that can be processed.

Key to effective use of big data are services that specialize in processing that information. Companies like The Echo Nest (recently sold to Spotify) and Gracenote (owned by Tribune Company) work with many of the platforms, creating data sets that enable Pandora, Spotify and others to better understand their listeners.

Big data processing is important on the advertising side as well. Companies like Pandora and iHeartRadio employ their own fleet of programmers to keep their data proprietary and make it understandable and useful. Third party providers like Triton Digital work with many companies to process their data and create identifiable audience characteristics.

Using a combination of zip code analysis and an individual’s music tastes, Pandora has begun creating audience profiles based on political affiliation. Exploring similarities between music choices and movie preferences, The Echo Nest concluded, among other things, that “if you like crime movies, you most probably enjoy listening to Jimi Hendrix, The Beatles, The Rolling Stones, Jay-Z, The Who, Bob Dylan, and Pink Floyd in that order.”

From selling tickets to the Carole King musical “Beautiful” on Broadway by targeting listeners who like her music, to selling flowers for Mother’s day to guys of a certain age who tune in to kid programming so their kids can listen, it’s exciting to think about the possibilities that big data can offer to streaming audio.

 

 

Advertisements

Painting The Town Spotify Green

The competitive landscape of online music services had a busy week, with everyone out and about in Austin at SXSW wooing press and fans. Just 3 months after announcing that they had reached 5 million subscribers globally, Spotify announced this week that they now have 6 million paying subscribers, and declared themselves the fastest growing music service ever. Their presence in Austin featured a house, painted Spotify green, where they hosted live bands.

Spotify's big green house #sxsw

Rdio announced this week that they are expanding to still more countries. Their service, which new subscribers can hear ad-free for the first six months, is now available in United Kingdom, Australia, Belgium, Canada, Denmark, Estonia, Finland, France, Netherlands, New Zealand, Norway, Portugal, Spain, Austria, Iceland, Ireland, Italy, Latvia, Lithuania, Mexico, Sweden and Brazil, in addition to the US.

Pandora hosted a “Discovery Den” that featured many well known artists, some of which also made an appearance at iHeartRadio‘s SXSW party. Rhapsody had a party, and hosted a panel as well: ‘Streaming Music: A River of Cash or up the Creek.’ The panel will bring together perspectives from all sides of the issue to examine what roles streaming music services can play for artists today and in the future. Hats off to them for that.

Streaming’s Top Songs Chart

English: The logo for the Billboard magazine.

In a nod to the increasing share of music that is getting listened to via streaming platforms, Billboard has added a Streaming Songs Chart to its weekly listings. Last spring Billboard started charting top songs played by On Demand services, this list will cover those and add the songs played most by streaming services. Macklemore & Ryan Lewis holds the top spot on Streaming Songs with 1.45 million total streams in the U.S. Services included in the reporting are “such services as Spotify, Muve, Slacker, Rhapsody, Rdio, MySpace, Xbox Music and Guvera.”

The data comes from Nielsen Soundscan and Nielsen BDS data – Nielsen SoundScan measures U.S. point-of-sale of recorded music product. Nielsen BDS tracks U.S. radio airplay and music streams. Both systems power many of the Billboard charts. Nielsen recently reported that music purchases are at an all time high, up 3.1% over last year, driven by digital sales. For 2012, sales of albums and track equivalents are down slightly at -1.8% vs. 2011. Digital Albums are up 14% and Digital Tracks are up 5%. CD sales declined 13%.

Pandora meanwhile has posted a recap of sorts of last year on its blog, noting that last year listeners to Pandora created 1.6 billion stations and listened to more than a million different songs by 100,000 different artists. I’m thinking that data is probably at least as deep in terms of sample size as the stuff Nielsen is collecting…

RAIN Summit Europe is This Friday

 

I’m heading to Europe this week for the very first RAIN Summit there – in Berlin on Friday October 5th. It is looking like it will be a great event – the room is close to sold out at this point, and the agenda and speaker list are impressive. I expect to learn a lot. 

AdSwizz, Triton Digital and Liquid Compass are the presenting sponsors of this event, and they were instrumental in convincing my colleague and partner Kurt Hanson and I to bring RAIN Summits to Europe. We’ve been planning this day for almost a year.

The event will take place at the very trendy nhow Hotel on the River Spree in Berlin, a city that is full of folks who know a lot about new media in general, and Internet radio as well. I’m looking forward to panel discussions that will focus on technology and programming, business and monetization. A panel discussion on the Connected Dashboard will feature execs from BMW and Open Synergy. We’ll hear experts talk about measurement topics, both from the content side, and then from the agency perspective. Our Agency Roundtable features executives from agencies across Europe.

There will be two keynote presentations – Kurt Hanson, Publisher of RAIN: Radio and Internet Newsletter, and Jonathan Forster, General Manager of Spotify Europe.

No doubt we’ll discover many similarities as well as differences between the US and European streaming marketplace. In fact, that’s the point of RAIN Summit Europe: provide a format for discussion and debate among industry experts, in a group small enough so that everyone can network and communicate. I hope to see you there, and can’t wait to tell you all about it…

 

Spotify’s Losses Are Growing

After launching in the US last summer, Spotify has more than doubled its revenue to  €187.8 million, but is spending nearly all of that. Paid Content reports that Spotify’s annual loss widened to €45.4 million in the 2011/2012 12 month period. Spotify’s challenge is to expand rapidly enough to cover expenses, while battling the high cost of streaming music laden with hefty licensing fees.

Unlike platforms like Pandora, iHeartradio and other streaming broadcasters and online only webcasters, Spotify is an on-demand platform that negotiates licenses directly with the labels. In fact, the major labels all have a stake in the company as part of those negotiations.

Spotify’s business model is different as well — subscriptions are a more important part of their revenue strategy. Spotify is spending lots of time and energy pursuing the widespread use of its API and third party app, and in fact hopes to become the world’s source for streaming music. When you think about the fact that the labels have a stake in this, it makes quite a bit of sense.

The main problem is that expansion is difficult, margins are slow, and losses are becoming hefty. Which could necessitate more funding. Which would in turn dilute the labels and prompt them to negotiate higher rates in future licensing deals. A merry-go-round of a business model…

Teens Prefer YouTube For Streaming Music

Image representing YouTube as depicted in Crun...

When my daughter, who is 17, wants to hear a song, she doesn’t turn to radio. Nor does she go to Spotify or Pandora. YouTube is her on-demand streaming service. A new study out from Nielsen says she is not alone. More teens listen to music on YouTube (64%) than radio (56%), iTunes (53%) and CD (50%).

Radio is still the primary machine for music discovery across all ages, but it looks like this study does not try to restrict the definition of “radio” to AM/FM.

The new Nielsen report offers insights on all aspects of music consumption including listening and purchasing behaviors; music discovery; live events; the use of social networking and mobile music apps; as well as how the economy is affecting music sales.

“The accessibility of music has seen tremendous expansion and diversification,” said David Bakula, SVP Client Development, Nielsen.   “While younger listeners opt for technologically advanced methods , traditional methods of discovery like radio and word-of-mouth continue to be strong drivers.  With so many ways to purchase, consume and discover great new music, it’s no wonder that the consumer continues to access and enjoy music in greater numbers.”

One of the takeaways of this study is that radio is a music discovery machine — curated programs and personalized streams work well for helping people find new music. But once they find it, they are inclined — especially teens – to turn to YouTube where they can WATCH it. When it comes to on-demand streaming, YouTube is (still) the elephant in the room…

Spotify Offers Free Mobile Streaming

Spotify has moved to offer its mobile streaming options, previously locked down under a monthly subscription, free to listeners. In an obvious response to the exponential growth that Pandora has experienced in mobile listening, Spotify will now feature “free mobile radio – Spotify style”.

The offerings feature the ability to create a station from a song, artist or genre and unlimited listening. Calling it the only free radio that you can save, Spotify mobile offers interactive options to like or dislike a song to influence your station or save the song to a playlist. Until now, it cost ten bucks to get all that on your mobile devices.

It sounds like a good offering, one I’ll bet Spotify wishes they had jumped on a little earlier. Pandora, with 150 million registered users and direct connections on lots of dashboards and tuner devices, has had a handy headstart. This move by Spotify is recognition of the impact that a popular free app in the iPhone and iPad app stores can make.

Free users in the US will hear advertisements from the following launch partners: Chevrolet, Durex, Heineken, Red Stag by Jim Beam, Lipton Iced Tea, Macy’s, McDonalds, Progressive, Red Bull, Taco Bell, Verizon Wireless, and Warner Bros – all of which are current Spotify advertisers. 

 

As for Pandora, I suspect they knew it was only a matter of time before Spotify moved to pick up a piece of all that mobile listening to Pandora for free. They may even welcome the fact that Spotify will now join in their efforts to monetize mobile streaming ads…

Pandora, Spotify Discuss Ad Dollars at RAIN Summit West

Robin Flynn of SNL Kagan hosted a panel discussion called “Charting Digital Audio Ad Dollars” at RAIN Summit West on April 15th. Advertising is on the upsurge, she concludes, and cpms are solid.

Mitchell, Van de Wyer and Kritzman on stage at RAIN Summit West

Pandora SVP of ad sales Steven Kritzman, Katz Online President Brian Benedik, Spotify VP of ad sales Jon Mitchell and Alexis Van de Wyer, President of Adswizz, Inc. were the panelists contributing to the panel hosted by Flynn.

There is a healthy interest in advertising on Internet radio, and the cpms are getting stronger. Contributing to the interest is Internet radio’s ability to deliver key groups such as 18-34 year olds, Hispanics and upper income groups. Advertisers from many leading categories are now active in Internet radio, including finance and entertainment along with auto, restaurant and retail. Mitchell said that Spotify has 1,400 different advertisers.

Nonetheless, audio ads continue to be under monetized. Campaigns that include video in the mix with audio will produce a higher cpm overall, but targeted local campaigns are also pulling higher cpms. Benedik estimated that while generally network radio CPMs are $4 to $6, he said that geo-targeted campaigns can boost CPMs to $6 to $12.

Local advertising is gaining interest on Internet radio, led by the precise targeting abilities of Pandora. Thanks to listener registration, platforms like Pandora and Spotify can target by listener demographics, geographics, or taste in music. Benedik is looking for local revenues from political campaigns this year to be healthy.

The group acknowledged that monetizing audio effectively remains a challenge. Flynn notes: “Given that 70% of Pandora’s listeners listen on a mobile device, Kritzman said, the company is working hard to better monetize those listeners. Pandora execs have recently said the company’s RPMs, or revenue per 1,000 listening hours, are $60 to $70 for its desktop Internet business versus $20 for the mobile side, but mobile is expected to catch up.”

Streaming Royalties To RIAA Topped $500 Million Last Year

2011 revenues for the record industry from streaming music royalties jumped to more than half a billion dollars, according to a year end report by RIAA. Revenues from subscripton services (like Spotify, Pandora One, Rdio, MOG, Slacker) jumped 13.5% to $241 million, and Digital Performance Royalties, paid by all other streaming services (including Pandora) rose 17.2% to $292 million.

Bread and butter

In its fiscal year ended January 2012, Pandora paid out more than $285 million in “content acquisition”, the bulk of which is performance royalties to SoundExchange. The time periods don’t match up perfectly because the RIAA report is calendar year, but you get the picture — Pandora’s paying a huge amount to SoundExchange.

Which should make for an interesting next round of negotiations for streaming royalty rates. Tim Westergren has always been very vocal on this topic, stating over and over again that he’s not against a royalty, but that the current costs are too high. With the next round of CRB hearings looming, he’s talking about it again. But this time, he’s coming to the table with over a 100 million registered users. And he’s SoundExchange’s biggest customer.

Pandora’s also got a lot of investors, and they’re working that crowd as well, including this statement in their recent SEC filing:

“Since our inception in 2000, we have incurred significant net operating losses and, as of January 31st, 2012, we had an accumulated deficit of $101.4 million.  A key element of our strategy is to increase the number of listeners and listener hours to increase our market penetration. However, as our number of listener hours increases, the royalties we pay for content acquisition also increase. We have not in the past generated, and may not in the future generate, sufficient revenue from the sale of advertising and subscriptions to offset such royalty expenses.”

This new revenue report from the RIAA shows very clearly that the recording industry is becoming increasingly dependent on the streaming industry as a very real source of bread and butter.

 

HTC Moves Into Streaming Music With MOG

Image representing HTC as depicted in CrunchBaseIt’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?

%d bloggers like this: