Despite Reports, Don’t Look For Pandora To Be Acquired Anytime Soon

Is Pandora really up for sale? If it is the timing is extremely curious.

Pandora was said to have begun talks with Morgan Stanley to help it find a buyer, according to an initial article by the New York Times, although the talks were deemed preliminary and had no guarantee of a deal. If you look deeper into the company’s pros and cons, a sale looks a lot more fantasy than reality though, at least in the near future. 

While much of the press has focused on the financial part of a possible sale, let’s look at what may be some of the more intriguing aspects of a possible sale.

Where’s the match? 

There are only a handful of deep-pocket companies that might take a even cursory glance at a Pandora acquisition, but most are not a good fit. For instance, Google’s name is frequently mentioned as a possible Pandora suitor, mostly because of the synergy with it’s ad network, since most of Pandora’s revenue comes from ads. That said, there’s really nothing about Pandora that Google doesn’t either already have, or can’t get for less money.

Apple is another that doesn’t need what Pandora has to offer. It already has the same infrastructure for its iTunes Radio, and chances are that most of Pandora’s subscribers are already iTunes users. There’s not much that Apple would find attractive.

iHeart Media could probably find a space for Pandora among its current online radio properties, but the company reportedly has a huge amount of debt and would find it tough to swing a sale that would probably cost it around $2 billion.

Some think that Samsung might be a fit based on the company’s need to keep up with Apple in the smartphone market. The problem is that it already has a similar service in its Milk Music which hasn’t gotten any traction in the U.S. Pandora could instantly give it that traction, but to what end? Does the addition of an on-board music app make that much of a difference to the average smartphone buyer? In a word, no. Samsung would be better off pouring that $2 billion or so into R&D than adding a music app that could be obsolete in the blink of an eye.

Then there’s Amazon. I’ve been predicting for the last year that Amazon would be the next deep-pocket company to enter the streaming music market in a big way, as it’s basically there already with its Amazon Prime Music service for its Amazon Prime members. Reports have recently surfaced that the company is getting ready to introduce a mainstream streaming service not tied to Amazon Prime, and Pandora could actually be a useful addition if that were the case.

Read more on Forbes.

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SoundCloud Rolls Out Its Own Version Of Pandora

SoundCloud is angling to become a full-fledged streaming service, and it just took a big step towards that goal with the introduction to what it calls Stations.

Stations takes the the previous "Related Tracks" feature one step further by simplifying it and improving the recommendations. The result is what the company hopes will be increased music discovery.

If this sounds familiar, that's because it's just what Pandora has been doing for a number of years now,  as well as Spotify and Apple Music, but this is a first step to get SoundCloud into the same game as those large services.

Essentially, a station is generated from any track, search term, or content stream in your Collection. All you have to do is tap the three-dot menu next to a track and select "start track station" to begin. After the first track plays, SoundCloud uses your listening habits and track selections to determine the songs you'll hear next.

The feature works on both Android and iOS devices but hasn't made it to the web app yet.

My guess is that it won't have too many people giving up their Pandora accounts just yet, but it's a good first step.

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Finally, A Streaming Service At A Reasonable Price

The major record labels have been largely responsible for the $9.95 per month prices being charged by the streaming services, even though most industry experts see that as a barrier to entry, meaning that it's just too high. Ideally you want more people paying a monthly charge, even if the price is lower, since it will ultimately mean more revenue at the end of the day.

There's at least one new music service that's managed to keep the prices low though. The new Cur Music has two low priced tiers that break the $9.95 mold.

The first Cur tier is called "Octo" for $2.99 per month, and the higher priced "Inked" tier is $6.99 per month. Both tiers are ad-free, with the only difference being that Inked lets you listen offline.

Cur has a library of 10 million tracks, and emphasizes playlists and radio rather than on-demand streaming, so it's competition is more Pandora than Spotify. It also has an internal messaging system that lets users attach photos or videos to songs before sharing them.

There's a free trial that you can check out here.

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5 Bold Music Business Predictions For 2016

The new year is upon us, which means it’s time to look into the crystal ball to foresee what might happen in the music business in 2016. Here are 5 predictions that may not be very popular, but might end coming to pass.

Prediction #1: Pandora goes global
One of the most significant and generally overlooked moves of 2015 was Pandora’s bid on some of Rdio’s streaming assets out of bankruptcy. While this move is still contingent on the court, acquiring this infrastructure will allow Pandora to become an interactive service like Spotify, and allow it to begin servicing other markets besides the United States as a result. With a solid 80 million user base in the US alone (which is what Spotify has globally), setting up shop worldwide will allow Pandora to become a true rival to Spotify.

Prediction #2: Vinyl shows its last big growth spurt
Vinyl sales have seen double digit growth for about 5 years and that will continue in 2016 as well, thanks to increased pressing plant capacity brought about by newly manufactured presses (the first in over 30 years) and widespread availability of turntables so buyers can actually listen to their purchases. Although sales will continue to increase beyond 2016, they’ll be much more modest as the number of new buyers diminishes due to saturation of the market. 2016 will be the last year of the true vinyl “revival.”

Prediction #3: Amazon Prime Music makes a move
Amazon Prime Music has been a minor add-on to a Prime subscription until now, but that doesn’t mean that Amazon isn’t taking music streaming seriously. The company has  all the infrastructure it needs to launch a mainstream music-only service, and 2016 will be the year it does so. Amazon has also been dipping its toe in the water of becoming a full-fledged record label with its occasional offerings from Amazon Acoustics, which could potentially signal what might be a major part of the service and could be a differentiator in a crowded market. Read more on Forbes.

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The Beatles Finally Coming To Streaming

All signs are pointing to one of the last major remaining holdouts, The Beatles, finally coming to a streaming network near you. Billboard, MBW, and Hits Daily Double all report that the Fab 4 will finally be available on either Apple Music or Spotify (or both) on Christmas Eve.

There's also some speculation that The Beatles music might be the first available only on Spotify's Premium tier. Last month CEO and founder Daniel Eck seemed to indicate that the company was softening its stance on making certain superstar artists available only on the paid tier and not on the free one.

This seems like a good strategy that may not only get more people to upgrade their accounts (which pay much higher royalties to artists, publishers and labels), but to appease the music industry as well.

The music business has long been railing against giving away music for free, although money is still generated via advertising, just at a lower rate.

The Beatles haven't been absent from streaming altogether though. They've been on Pandora for some time because of a more encompassing license for the non-interactive format.

Just as a point of reference, the band has sold 178 million albums in the US to date, according to the , and their music has been available on iTunes since 2008.

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Gigmor's David Baird On My Latest Inner Circle Podcast

David Baird of Gigmor

If you ever wanted to replace a player in a band or find a band to join, you know how difficult the process can be. Finding players of the same interests and proficiency levels really complicate things.

David Baird had the same problem when he moved to Los Angles (just about the last place you'd think that would happen), so the savvy technologist built a new platform called Gigmor that allows not only players to connect with each other, but bands and artists with venues as well.

On this week's podcast David will tell us how Gigmor got started and how to get the most from this innovative website.

In the intro, I'll talk about the implications of Pandora buying some of the assets of the Rdio streaming service, and the hi-res music logo that the RIAA just introduced that seems to cause more confusion than it solves.

Remember that you can find the podcast at BobbyOInnerCircle.com, or either on iTunes, Stitcher and now on Mixcloud and Google Play.

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The Pros And Cons Of Pandora’s Rdio Acquisition

The music streaming wars just became a bit more interesting early this week when Pandora agreed to acquire some critical assets of the Rdio streaming service out of bankruptcy for a reported $75 million. This will the second strategic acquisition that Pandora has pulled off recently, following its $450 million purchase of Ticketfly a few months ago.

On the surface this seems like it could be a huge positive for the company, but there are also a few potential land mines that come with the deal. Let’s look at the pros and cons.

Pro: On-Demand Infrastructure Can Provide Growth
Pandora is acquiring Rdio’s streaming technology (as well as some of its staff), which could be key to its global expansion. Right now the service is only available in the United States, and to a lesser degree, Australia and New Zealand.

A real problem for Pandora until now has been its ability to expand beyond those territories, mostly due to the company not being able to come to a suitable agreement with the licensing organizations in various countries (which all seem to favor on-demand streaming).

The company is now more more likely to be able to grow, as having Rdio’s on-demand streaming infrastructure available as an integral part of the service not only makes for a more attractive package for the consumer, but may make it easier to gain approval to operate in other countries.

Pro: The Public Prefer’s On-Demand
Give Pandora credit, as it saw the writing on the wall that on-demand streaming would eventually become a clear winner with consumers over the radio-like non-interactive service that it currently provides.

This was blatantly evident with Apple’s recent entry into the market with it’s on-demand Apple Music after only offering the Pandora competitor Apple Radio previously. You could see the trend in user numbers as well, as on-demand Spotify’s numbers continue to grow while Pandora’s have been relatively stagnant.

Con: On-Demand Licensing Costs Are Considerable
While that on-demand infrastructure is important, Pandora didn’t inherit any of Rdio’s roughly 1 million customers in deal, mainly because it’s not buying the Rdio business itself. Maybe more importantly, it didn’t get any of its licenses with the record labels, which were non-transferable. That means that the company will need to negotiate these deals, which can be both costly and time-consuming. Read more on Forbes.

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Pandora's Ticketfly Purchase Good For Artists And Shareholders

Streaming music service Pandora reeled off a blockbuster purchase yesterday, coming to an agreement to acquire the online concert ticketing service Ticketfly,

The company announced that it purchased the ticket company with a combination of cash and stock amounting to around $450 million. Ticketfly’s gross revenue was around $500 million last year which resulted in net commissions of around $35 million. The company, which specializes in selling tickets for small to medium size venues, has shown some significant growth in the first half of 2015 with a net of around $55 million. 

The purchase could be classified as a coup for Pandora, as it moves the company into an area ripe for disruption that also puts it in a position to finally turn a profit.

Concert revenue has become the major source of income for many top tier artists, more than making up for the losses incurred when the industry switched to digital music. The problem is that the areas of music discovery (mostly radio) and consumption via streaming music services haven’t integrated very well with the concert industry, which means lost revenue opportunities. Artists below the superstar level have yet to benefit to the same degree from the increased concert revenue as well.

Only about 20% of the US population attended a live music event last year, according to the giant concert promoter LiveNation. The reason that the figure is so low isn’t because fans have an aversion to crowds, but mostly because they’re not aware that their favorite artists are performing near where they live.

Having Ticketfly as an integral piece of Pandora may be an answer to this dilemma. 

While Pandora has yet to turn a profit from its music service, one thing it does boast is close to 80 million active users. Read more on Forbes.

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Will Indie Streams Earn Less Than Major Label Streams?

In case you've ever wondered how the streaming rates for services like Pandora and iHeart Radio are determined, it's by a trio of judges selected by the US Library of Congress called the Copyright Royalty Board or CRB.

Ever 5 years the CRB sets a new rate, which usually increases slightly each year of the five.

Non-interactive services like Pandora currently at mandated to pay $0.00014 per stream, but that's due to change in 2016, and the CRB is meeting now to determine by how much, if any, the streaming rate will increase.

There's some evidence that the CRB is looking into variable royalty rates this time around. This means that there could be one rate for the major labels, and another cheaper rate for indies.

This would be a disaster for any artist not signed directly to a major, and as you'd probably expect, the outcry from indie labels has been great.

To be clear, the CRB has NOT determined this is the way to go yet, but there's evidence that the direction has been explored. Obviously not a good thing if it happens, as all those thousand's of a cent rack up over time into some real money.

The CRB does not set the rate for on-demand streaming like Spotify, which does direct deals with the labels.

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What’s Really Behind Pandora’s Ad-Free Day

Pandora has announced that it will celebrate it’s 10th anniversary on Wednesday September 9th with a day that’s free of ads for its freemium tier. While many will look at what’s being called “Listener Love Day” as a nice gesture to celebrate a decade in business, there may be more to it than meets the eye.

While a day without ads might give Pandora’s freemium listeners (who make up 95% of its active users) a sample of what the premium paid-subscriber tier is like, it can also be viewed as an all-out effort to get at least some of those users to finally buy in.

Pandora currently has about 250 million subscribers but only 80 million are active, according to the company’s own numbers. Of those, just around 4 million, or 5%, have chosen the $4.99 per month ad-free premium tier (and many of them subscribed at the previous $3.99 level). This ratio has been surprisingly steady throughout its history, and the service hasn’t proven that it has the ability to up the conversion rate.

What’s even more out of balance is that those 5% of paid subscribers are responsible for just over 20% of Pandora’s revenue for the first half of 2015, according to the company’s Q2 financial statement.

In comparison, Spotify has around 75 million users and about 20 million are subscribed to the paid tier, which is more than 26% of active users. Those subscribers are also willing to pay twice as much at $9.99 per month. Read more on Forbes.

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Can 1 Trillion Streams Save The Music Business?

It’s funny how all the players in the music business are faced with the same questions when it comes to streaming distribution. Are all streams being counted? How many actually generate revenue and how much is it? Is the revenue actually making it to the right places?

Artists, bands, musicians, songwriters, managers, labels and publishers ask these questions every day and the answers they receive are often vague, or worse, contradictory. 

Take for instance the latest data from a survey conducted by Next Big Sound that counts the number of streams for the first 6 months of 2015. The company found that there were 1,032,225,905,640 (or 1.03 trillion) song plays on Pandora, Rdio, Spotify, SoundCloud, Vevo, Vimeo and YouTube during that period.

Now what’s interesting is that this is only a partial list of streaming services with significant subscriber bases. iTunes Radio, Deezer, Slacker, Rhapsody and Google Play, among others, weren’t included, so this total could actually be low.

Now here’s where the confusion comes in. Nielsen Music’s mid-year report states that there were only 135 billion on-demand streams during the first half of the year. This was based on data from AOL, Beats, Cricket, Google Play, Medianet, Rdio, Rhapsody, Slacker, Spotify, Xbox Music and YouTube/Vevo. 

As you can see, only Rdio, Spotify and YouTube/Vevo were included in both surveys, but doesn’t that 135 billion figure still feel a little low? Some discrepancy is understandable due to the fact that Nielsen only included interactive services and not radio-like services like Pandora, but a difference of a factor of almost 10 screams out that something’s not quite right here.

Then there’s the question about getting paid, because after all, 1 trillion is a lot of streams. 

It would be nice if there was a single rate that each and every stream was worth regardless of the streaming service that it came from, but unfortunately it’s not that simple. 

For instance, interactive streams where the user can actively choose which song is streamed (like Spotify) pay a higher rate than non-interactive streams that are more radio-like (like Pandora). Plus the free tier of both pays less than the premium subscription tier. To make it a little crazier still, different countries may pay different rates, Spotify pays what amounts to a bonus for greater market share, YouTube pays less than them all, and some views might not pay anything. Read more on Forbes.

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SoundExchange Becomes A Major Source Of Online Revenue

When non-profit SoundExchange first started in 2000 its royalty payouts were so small that they were only rounding errors on most copyright owner and artists income statements. Today that's all changed as the service recently announced that it sent out $1 billion in royalty payments last year alone.

This is quite an achievement since it took SoundExchange 10 years to reach the first billion in payouts but two years for the second. In fact, last year the royalties paid by the organization accounted for about 16% of the American music industry's total income.

So where does the money come from? SoundExchange collects money only from digital radio, with the bulk of it coming from SiriusXM and Pandora. As a result, the organization has now become one of the major PROs along with ASCAP, BMI, and SESAC.

After deducting about 4.6% to cover its operating expenses, the organization sends 50% to the copyright holder (usually the record label), 45% to the featured artist and performers, and 5% to a special fund for session musicians and backup singers.

What's significant here is that artists actually get paid for radio airplay, unlike terrestrial radio where only the publisher and songwriter get paid.

If you're an indie musician and you're getting airplay on digital radio, there may be some money waiting for you in escrow. Sign up at SoundExchange today.

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How Much Is A Music Stream Actually Worth?

There's a lot of confusion in the marketplace about how much a music stream is worth. To say that it's a complicated issue is an understatement.

• It depends upon all of the following factors:

• What type of service (interactive like Spotify, or non-interactive like Pandora)

• Which tier (free or paid subscription)

• Which territory it's played in (they all pay different royalty rates)

• Your marketshare (on Spotify you get paid more if you get played more)

As you can see, it's impossible to say exactly what each stream is really worth, and the best we can do is get an average. Billboard has done just that with a great infographic that gives you an approximate worth of a stream coming from Spotify and Pandora.

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A Look At The Crowded Streaming Marketplace

Apple Music launch this week moves it into an already crowded streaming marketplace. This Edison Research survey (the chart was put together by Statista) shows that Pandora has a commanding lead in the US over all other streaming services.

It's important to remember that Pandora isn't available in most of the rest of the world, so Spotify basically has matched its user numbers if you look at it globally.

Apple Music hopes to be at the top of the food chain within a year though, and actually has a shot at it despite the tepid launch thanks to its hardware user base and the 850 million credit cards currently on file.

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Like A Coiled Snake Spotify Strikes Back At Apple Music

If you thought it was a coincidence that Spotify released new and much improved subscriber numbers directly after the big Apple Music announcement at its World Wide Developer Conference, then you haven’t been paying attention to what many are calling the “Streaming Wars.”

At least in the short term, Spotify is still the market leader in the interactive music streaming space, and the company did its best to put an exclamation point on that fact by providing a lot of new information, strategically waiting a day for the Apple Music furor to die down a bit to steal a little thunder for itself.

At the end of last year, the company touted 60 million total subscribers, with 15 million of them paying the going rate of $9.99. That number far outpaced its closest rival in Deezer, with only 6 million paid subscriptions, and others like Rdio and Tidal that fall below the 1 million mark.

But Spotify’s new user numbers show a striking increase in a short time, with the company announcing it now has 75 million users, of which 20 million are now paid subscribers. This makes the company a major player even when compared to the non-interactive streaming side of things, as Pandora only sports 79 million total users, with the vast majority of those using the free tier. 

While user numbers are solid proof of growth, another part of the same announcement may be even more important. The company also reported another round of funding for $526 million, which places its valuation at around $8.53 billion (keep in mind that it has yet to turn a profit). 

Among the partners that invested in this round include Swedish telecommunications firm TeliaSonara AB and Abu Dhabi’s sovereign wealth-fund, so there are some deep pockets with a large stake in the company’s success. Read more on Forbes.

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BMI Wins A Royalty Fight With Pandora

As you probably know, BMI and ASCAP have been fighting with Pandora for quite a while over the performance royalty rate that Pandora pays.

The streaming service was paying 1.75% of it's total revenue to the performance rights organizations (PROs), which all of the organizations deemed an unacceptably low rate.

ASCAP managed to renegotiate that rate up to 1.85% in December, but now BMI has won an improvement on that up to 2.5% in the latest court ruling. BMI actually asked for 3.825% initially, but was only granted the lower number.

This was an interesting development for a couple of reasons. Songwriters and publishers will get paid more, which is always a good thing. But the fact was that BMI was forced into this since many large publishers like Sony/ATV, Universal Music Publishing, and BMG Publishing pulled out of BMI and renegotiated their own deals with Pandora. They also settled at the 2.5% mark.

The 2.5% rate is about a 33% increase, so songwriters and publishers can rejoice in that fact, but it's only for non-interactive part of the streaming business. Unfortunately more money is being collected on the interactive part of the business from services like Spotify, but that money flows through the record labels first instead of a PRO or publisher before it gets to the songwriter. Until that changes, songwriters will continue to get the short end of the royalty stick.

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People Are Listening To Pandora Less

A recent study has found that people are listening to Pandora less, which is not good news for the beleaguered streaming service. The NuVoodoo Ratings Prospect Study found that there are multiple reasons for people listening less. They are:

• There are more listening choices
• Pandora become too predictable over time
• It's boring
• They can't skip enough songs
• Too many songs I don't like
• The commercials are annoying
• They miss hosts
• There's no local information available

The last two points are interesting because it's been found that the people who like Pandora the most are the ones that are regular broadcast radio listeners as well.

There are those that like Pandora more than broadcast radio though, mostly because:

• The music is better than broadcast radio
• A wider range of music is available
• There are no hosts or DJs interrupting
• Fewer commercials than broadcast radio

Probably the biggest thing to hurt Pandora is the fact that there's just a lot more competition than there was before. The service still has the largest user base of any of the streaming services at over 70 million, but it looks like it's growth has leveled off recently. As a result, Pandora has to fight more than ever to keep the listeners it has.

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A Look At The American Listening Audience

Edison Research and Triton Digital recently released their annual Infinite Dial survey on American media consumption.

As usual uncovered some very interesting data about the audience that hopefully listens to your music. Here are 7 takeaways.

1. 71% of all Americans now have a cell phone, up 10 points from last year. More and more, people consume their media on this platform. 

2. Embattled Pandora is still the leader in music streaming with 54% of online radio listeners. The runners-up are pretty distant, with iHeartRadio at 11%, Spotify at 10% and iTunes Radio at 8%. 

3. Facebook is the most used social network at 65% of those who regularly use social media. 

4. Facebook is even big in the age group that's seeing the most attrition - ages 12 to 24. 43% in that group still use Facebook, handily beating Instagram at 18%, Snapchat at 15%, and Twitter at 8%. 

5. 63% of Americans use YouTube to watch music videos and listen to music. 

6. That number increases to a whopping 90% ages 12 to 24 years old. 

7. 44% of all Americans listen to music online in some form every week.

Media consumption has changed drastically in the last 5 years and continues to change right before our very eyes. One of the keys to your online promotion strategy is knowing your audience, and the above data helps to understand just who the audience for your music is and how they like to consume it.

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Pandora Tries To Add Value For Artists

Stung with ongoing complaints of low royalties from artists across the success spectrum, Pandora has instituted a new feature to presumably add value to their being on the service. 

The feature is called “Artist Audio Messaging” and it will allow artists to submit short recordings regarding tour schedules or new music, then have them added to playlists based on their music.

Pandora has signed 10 artists for the pilot program utilizing the feature that will soon include Lenny Kravitz and Fall Out Boy.

While artists, labels and managers may like the feature, fans don’t seem all that thrilled with the prospect, as the comments so far are more in the camp of "wanting to listen to music with the least amount of interruptions possible," even if it is from a favorite artist.

Pandora knows its fighting a battle that it will eventually lose to on-demand services like Spotify, so its strategy is to get artists on its side. By giving them some added value besides having their music on the service, it could keep the it viable long enough to be bought by a larger entity, or so the idea goes. Unfortunately, this first effort hasn't gotten off the start it anticipated.

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You should follow me on Forbes for some insights on the new music business, Twitter and Facebook for daily news and updates on production and the music business.

Pandora Teases Streaming Subscribers With A New Ad Model

Streaming music platform Pandora has tried a lot of things to both raise its income and increase its subscriber base, but the company is getting especially aggressive with a brand new ad model that promises an hour of ad-free music for just clicking on a banner ad. 

The new ad product, named Sponsored Listening, has a couple of big brands that are eagerly joining in the beta testing, which is initially launching only on Pandora’s mobile app. That’s a shrewd move since about 80% of its users listen on a mobile device, although the company projects a desktop version to come a few months down the line.

So far Fox and Sony Playstation have signed up for the new format, with Fox pushing its shows Gotham and Mulaney, and Sony’s campaign to launch in a few weeks. The ads will only be available to a small group of users targeted by the advertisers for now, but a full rollout to all sponsors and subscribers is expected to begin in latter half of 2015, according to the company.

Pandora currently has around 77 million users but around 3.5 million of those are paying subscribers. A subscriber pays $4.99 per month for ad-free listening, so the Sponsored Listening campaign is a way for more listeners to be exposed to the ad-free environment. For advertisers, not only do they the exposure via the banner ads, but also hope that users will associate the positive Pandora ad-free experience with their brands. Read more on Forbes.

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