Last week, SiriusXM revealed its joint Q1 2019 financial report following its acquisition of Pandora Radio.

The satellite radio company’s pro forma revenue jumped 10% year-over-year to $1.9 billion, up from $1.7 billion.  Overall revenue grew 8% to $1.5 billion.  The company attributed the growth to a 3% increase in SiriusXM subscribers and a 4% growth in average revenue per user (ARPU) to $13.52.  At the end of the first quarter, SiriusXM had over 34.2 million total subscribers.

Pandora Radio didn’t do so well.

The digital radio service’s monthly active users (MAUs) declined to 66 million, down from 72.3 million in Q1 2018.  This resulted in total ad-supported listener hours of 3.4 billion in Q1 2019, down from 3.8 billion year-over-year.

Yet, the digital radio service added 246,000 net new self-pay subscribers, ending the quarter with nearly 6.2 million self-pay subscribers.  The digital radio’s total subscriber count now stands at 6.9 million.

Speaking about the report in an earnings call with investors, SiriusXM CEO Jim Meyer said,

“We’re right where we want to be and moving very fast.  It’s still the first inning, but I’m pleased with the progress we’ve made so far.”

Now, following its financial report, the satellite radio company has announced new layoffs.

Here comes the ax.

Not everything was good news for SiriusXM in its Q1 2019 report.

The satellite radio company confirmed its net income experienced a sharp 44% decline, totaling $162 million compared to $289 million year-over-year.  SiriusXM attributed the steep drop to its Pandora Radio acquisition, completed on February 1^st.

So, according to a memo from Meyer, the satellite radio company will let go around 60 staff members.

Meyer wrote that due to the acquisition, “both organizations knew that there would be changes to the workforce as we realigned departments, formed new teams, and found we had a greater visibility on the roadmap for the combined companies.”

“We made these changes to better align our resources with business needs.”

The combined companies have around 4,600 employees.  SiriusXM will lay off just over 1% of its current workforce.

Attempting to motivate its current staff following the job cuts, Meyer concluded,

“The opportunities for SiriusXM and Pandora together are exciting, and, now more than ever, I need your focus and dedication on the work at hand.”

Featured image by SiriusXM.

Making millions, but largely in stock options.

Satellite radio giant SiriusXM has unveiled pay raises for its top staff.  In a regulatory filing, SiriusXM has confirmed multiple pay raises for its top five executives.

CEO Jim Meyer earned $17.6 million in 2018, up from $9.7 million in 2017.  $7.5 million came through stock awards.

Chief Content Officer Scott Greenstein, who now leads the Pandora original contents team, earned $19 million last year, up from $4.2 million.

The company confirmed that most of the compensation came through stock awards.

Jennifer Witz, President of Sales, Marketing, and Operations, earned $5.5 million, up from $4.6 million.

David Frear, Senior Executive Vice President and Chief Financial Officer, earned $16 million, up from $3.7 million.  $9 million came from stock awards and $3 million from options.

Dana F. Altman, Executive Vice President and Chief Administrative Officer, earned $7.5 million, up from $2 million.  $4.1 million came from stock awards and $1.5 million from options.

Following the company’s acquisition of Pandora Radio last year, SiriusXM has remained rather busy.

In a conference call, Meyer explained that the acquisition would create “the world’s largest audio-entertainment company.”  The satellite radio company, he continued, would capitalize on cross-promotional opportunities on Pandora’s active user base.  SiriusXM would also leverage its existing exclusive content and programming on Pandora’s ad-supported and subscription tiers to create “unique audio packages.”

Following through on Meyer’s promises, the satellite radio company first forced out Pandora CEO Roger Lynch.  The booted exec had led the company following founder Tim Westergren’s ouster.

Under Westergren, Pandora Radio bled money.  The company also never turned a profit, despite multiple promises made to investors.  Things had only slightly improved under Lynch.  Yet, the company continued to bleed listeners.

Then, SiriusXM unveiled its first dedicated original content team at Pandora.

The new team creates original music, sports, and talk content for Pandora’s listeners.  This includes the introduction of full-time channels, shows, podcasts, playlists, and spoken-word content.  Genres range from comedy, politics, and entertainment.  In addition, the new team also develops original Pandora content for SiriusXM.  This includes adding curated content using the digital radio service’s thumbs-up user data.

Next, Meyer’s company launched Pandora Now.

With a combined audience of 100 million listeners, Now, a new channel, would use both companies’ listener and curation data.  The channel features the most-listened-to and top-trending music on Pandora across all genres.  Now serves as an interactive station featuring song skips and ratings on both services.

Then, just last week, striking back at Spotify’s recent podcast acquisitions, SiriusXM converted 22 of its original shows into Pandora exclusives.

This includes Jenny McCarthy’s Celebrity Dirt, Andy Cohen’s Deep & Shallow Interviews, and Jeff Foxworthy’s A Comic Mind, among many others.

Not content to stop there, Meyer’s company soon unveiled an $8 monthly plan for people without cars.  Dubbed SiriusXM Essential, the new plan provides over 200 radio stations.  Users can listen to the new service either at home or through mobile devices, with smart speakers also a prime target.

You can view the compensation filing below.

(Click to enlarge.)

SiriusXM is going all-in on its Pandora acquisition.

SiriusXM has been busy following its acquisition of Pandora Radio.

Several weeks ago, the satellite radio company unveiled an original content team at Pandora.

Scott Greenstein, SiriusXM’s Chief Content Officer, leads the new team.  Together, they’ll create original music, sports, and talk content for current Pandora listeners.  This includes the introduction of full-time channels, shows, podcasts, playlists, and spoken-word content.  Genres range from comedy, politics, and entertainment.

In addition, Greenstein and his team will create original content for the satellite radio company’s listeners.  This includes adding curated content using the digital radio service’s thumbs-up user data.  Recently, Pandora overhauled its thumbs-up recommendation algorithms with six new listening modes.

Sirius personalities, including Ricky Gervais and Jenny McCarthy, may also start appearing on Pandora podcasts.

Now, SiriusXM has unveiled an ‘original music experience’ for both companies’ user bases.

NOW.

The satellite radio company has unveiled Pandora Now across both platforms.  SiriusXM claims to have a combined audience of 100 million listeners.

Using Pandora’s listener data, as well as the satellite radio’s curation data, both companies will launch Now later today.

According to a press release, the new channel will feature the most-listened-to and top-trending music on Pandora across all genres.

“The music played on Now will be uncensored and showcase the most listened to and fastest-trending new music on Pandora across all genres, including Pop, Hip Hop, R&B, Dance and Latin.

“Now will launch on Thursday, April 4th on both platforms.”

In addition, Now will serve as an interactive station featuring song skips and ratings.  Pandora premium subscribers will also have access to a curated playlist.  SiriusXM subscribers will have access on Channel 3.

Speaking about the new channel, Greenstein explained,

“We’re excited to combine, for the first time, the wealth of Pandora listener data with the proven curation expertise of our SiriusXM team to give our combined 100 million listeners a truly unique and unprecedented listening experience.

“Not only will Now give listeners exclusive, up-to-the-moment access to the music people are streaming on Pandora the most, it will let music fans influence which songs are played.”

Featured image by SiriusXM.

SiriusXM has now capitalized on its Pandora acquisition.

In a surprise move last September, Liberty Media’s SiriusXM confirmed it had fully acquired Pandora Radio.  The $3.5 billion all-stock deal valued Pandora at $10.14 per share.

In a conference call, SiriusXM CEO Jim Meyer explained that the acquisition would create “the world’s largest audio-entertainment company.”

According to Meyer, the satellite radio company aims to capitalize on cross-promotional opportunities on Pandora’s active user base.  SiriusXM would also leverage its existing exclusive content and programming on Pandora’s ad-supported and subscription tiers to create “unique audio packages.”

Now, the satellite radio company has unveiled its first major move at Pandora.

Building a singular content team for two companies.

SiriusXM has announced its first dedicated original content team at Pandora Media.

According to Scott Greenstein, the satellite radio company’s Chief Content Officer who will also lead the initiative, the new team will create original music, sports, and talk content for Pandora’s listeners.  This includes the introduction of new full-time channels, shows, podcasts, playlists, and spoken-word content.  Genres range from comedy, politics, and entertainment.

In addition, Greenstein’s new team will also develop original Pandora content for SiriusXM.  This includes adding curated content using the digital radio service’s thumbs-up user data.

Speaking about the dedicated original content team initiative, Greenstein explained,

“We now have two great platforms to work with, and to offer that to artists and content creators.

“Because we have dedicated teams at both Pandora and SiriusXM that are experts in programming, and now the Pandora audience and experience, it allows us to take programming elements that make SiriusXM great and make them available to the Pandora audience.”

Along with Greenstein, the original content team will include Alex White (Pandora’s Vice President of Content and Programming), Jeff Zuchowski (Vice President of Label Relations), Bill Crandall (Vice President of Editorial Content), and Lindsay Bowen (Head of Podcasts and Entertainment Content Partnerships).  Greenstein will also lead SiriusXM’s programming.

In addition, says Greenstein, the new initiative could see the satellite radio company personalities, including Ricky Gervais and Jenny McCarthy, appearing on Pandora podcasts.

“We are still two brands and support both fully.

“But there’s so much that can be done by sharing and making available content that before the acquisition was unavailable to both platforms.“

SiriusXM continues adding subscribers.

SiriusXM has posted its 2018 year-end results.

The satellite radio company added 1.4 million self-pay subscribers to finish off the year.  It now has 28.9 million self-pay subscribers, beating the company’s initial 2018 guidance by 40%.

Total net subscriber additions last year rose an additional 1.3 million.  SiriusXM now has approximately 34 million subscribers.  That’s a sizable mass, though SiriusXM’s gains are practically flat compared to the likes of Spotify and Apple Music.

During the 4^th quarter of 2018, the company repurchased around $646 million of its common stock.  Including dividends, SiriusXM claims it returned approximately $1.5 billion of capital to stockholders last year.

Summarizing the company’s year-end report, its CEO, Jim Meyer, explained,

“I’m proud to report that 2018 was not only another year of operational excellence at SiriusXM, with record high subscribers, revenue, and adjusted EBITDA.

“Last year also saw [our company] achieve important milestones, like the introduction of 360L and significant improvements in our smartphone apps and IP distribution on connected devices.

“We attained a record 40% adjusted EBITDA margin in the third quarter, saw our efforts in connected vehicle services bear fruit and, of course, we were extremely pleased to reach an agreement to acquire Pandora Media.”

Following a Pandora Media stockholder meeting later this month, Meyer added he expects to “close the Pandora transaction shortly.”  He remains confident the “transformational acquisition” will open up pathways for long-term value creation and cash flow growth.

Issuing its 2019 subscriber and financial guidance, the satellite radio company expects to add 1 million self-pay net additions.  SiriusXM also expects to bring in $6.1 billion in total revenue.  Adjusted EBITDA remains projected to reach $2.3 billion.  The satellite radio company projects free cash flow of $1.6 billion.

The company’s guidance doesn’t account for Pandora Media’s acquisition, expected to finalize in Q1 2019.

Pandora’s special meeting of stockholders to vote on the transaction will take place on January 29^th.  The US Securities and Exchange Commission (SEC) had declared the transaction registration statement forms “effective” on December 20^th.

SiriusXM will release its full-year and Q4 2018 financial and operating results on Wednesday, January 30^th.

Featured image by Michael J (CC by 2.0).

How much do artists make per stream? Reported per-stream payouts from top music streaming services (updated for 2021; click to enlarge)

How much do artists make per stream on the most popular streaming music services? Here’s a breakdown for Pandora, Napster, Spotify, Apple Music, Deezer, and more (updated for 2022).

Based on information directly received from artists and indie labels, as well as various published sources, we can rank streaming music services according to their per-stream rate. So how much do artists make per stream? Given extreme variations in payouts, the answer largely depends on the platform involved. Take a look.

Napster remains king of streaming music payouts, but total usage is lower.

With Microsoft’s Groove Music shutting down, Napster became king of streaming music service payouts.

The service had paid $0.01682 per play.  According to two sources – Information Is Beautiful and David Crosby – that number has steadily risen.  On average, Napster now pays out $0.019 per stream.  To meet the monthly minimum wage amount in the US of $1,472, an artist would need 77,474 total plays.

With 5 million paying subscribers, the service loses around $7.00 per user.  Unlike its rivals, however, Napster remains a profitable streaming music service.

Jay-Z’s beleaguered TIDAL remains a top player, at least in terms of payouts.

This year, Jay-Z’s streaming music platform, TIDAL, has remained embroiled in multiple controversies.  These include accusations of hacking users’ accounts to inflate Beyoncé and Kanye West’s total streams.

Nevertheless, the service had remained friendly to artists. But the service reportedly paid out $0.01284 per stream earlier this year. That number has fallen slightly to $0.0125, according to more recent data. Artists on TIDAL now need 117,760 total plays to earn $1,472.

Jay-Z’s streaming music service reportedly loses $6.67 per user with an annual loss of $28 million.

Apple Music takes third place.

How much does Apple Music pay per stream? Historically, Apple Music has paid artists much better than its streaming music rival, Spotify.

Back 2017, the service paid $0.0064 per stream. By last year, that number had risen to $0.00783. Now, Apple Music has upped its rate further: in April of 2021, the platform announced that its artists would receive a royalty rate of 1 cent ($0.01) per stream.

Artists on Apple Music would need around 147,200 plays to earn the US monthly minimum wage amount.

With Apple closely guarding its user metrics, it remains unclear how much Apple Music loses each year on the service as well as per user.

Deezer falls to fourth place.

Launching several years ago in the US, French-based streaming music service Deezer still doesn’t have an established presence in the country.

Back in 2018, at $0.0056, the service topped GPM in terms of payouts. By 2019, Deezer paid $0.00624. That number has slowly risen to $0.0064, placing it right behind GPM. Artists will need 230,000 total plays to earn the US monthly minimum wage amount.

Deezer recently reported an annual loss of $27 million, losing $1.69 per user. Deezer reportedly has 16 million users, with around 9.12 million – or 57% – paying for the service.

Amazon falls behind.

As with Napster, Apple, and Google, Amazon closely guards its user metrics.

Earlier this year, The Trichordist found Amazon paid indie artists $0.0074 per play. That number has now plummeted to $0.00402, placing it just above Spotify. Artists will now need around 366,169 total streams to earn the monthly minimum wage amount in the US.

How much do artists make per stream on Spotify?

Spotify’s per-stream rate ranks as one of the worst, and it appears to be falling. According to the latest data, Spotify pays most artists between $.003 and $.005 (one-third of a penny to one-half of a penny) for each stream. 

Back in December 2019, you may have read our report on cellist Zoe Keating’s receiving a $753 check from Spotify, as compensation for 206,011 streams. Rounding up, the sum represents a per-stream royalty rate of $0.0037 – down from Keating’s 2018 Spotify royalty rate of about $0.0054. Separately, mechanical royalty firm Audiam also suggested that Spotify royalties have decreased despite rising subscriber counts and revenue.

Of course, there are plenty of Spotify alternatives. But as of 2022, Spotify remains the largest streaming music platform worldwide — which means you have little choice but to play ball with them.

Pandora continues to struggle.

Back in 2018, despite having the second-highest amount of total users in the US, Pandora paid artists $0.0011 per play. By 2019, the digital radio service slightly increased that rate to $0.00134. The company has now settled at paying artists $0.00133 on Pandora Premium. Artists will now need 1,106,767 total plays on Pandora Premium just to earn $1,472.

YouTube pulls a U-Turn.

Historically, YouTube hasn’t ever been an artist-friendly platform, thanks to its horrendous payouts.

In 2017, the popular video platform paid $0.0006 per play. By 2019, the company had increased its rate to $0.00074.

But YouTube executives have now pulled a U-Turn, choosing to pay artists $0.00069. To earn the monthly minimum wage amount in the US, artists will need around 2,133,333 total plays on YouTube.

The video platform reportedly loses $174 million each year, with loss per user calculated at $0.17.

So, what’s our advice?

Once again, please don’t ever make a career out of your earnings on the popular video platform.  Trust us.  You’ll regret it.

Will the new deals help solidify SoundCloud as a viable sales advertising platform?

Over in the UK, SoundCloud has expanded its partnership.

The company has revealed a re-upped deal with DAX, an advanced audio sales platform.  DAX has worked exclusively with SoundCloud since 2016 after the indie streaming music platform launched its ad program in the UK and Ireland.  Now, the pair have endeavored to intensify the relationship — and associated revenues.

But the bigger deal maybe happening stateside.  In the US, SoundCloud has also confirmed a new deal with Pandora.  Starting in 2019, advertisers and brands can purchase US ad inventory for the indie streaming music service through Pandora.

That’s a win-win that gives Pandora greater reach, and SoundCloud better access to premium clientele.

Expanding SoundCloud’s advertising reach.

Speaking on the company’s partnership with Pandora, Kerry Trainor, SoundCloud CEO, said,

“Pandora and SoundCloud’s combined audience offering creates the clear market leader for brands to reach U.S. music fans.  Through this partnership, we gain access to Pandora’s world-class sales team and capabilities to connect more brands with our young, highly engaged users who know what’s next in music is first on SoundCloud.”

The announcement comes just a month after the indie streaming platform reached an agreement with the Official Charts Company.  SoundCloud streams will now be counted in music charts in both the UK and Ireland.

The indie streaming service’s deal with Pandora will allow it to better monetize digital audio in the US.  A recent report shared with Digital Music News revealed SoundCloud continues struggling to gain a foothold in the US – at least on Android devices.

In June 2018, the app had an 8.6% install penetration rate.  That number has only grown slightly over July 2017.

SoundCloud also has a 1.8% usage penetration – or daily active user (DAU) – rate, up just .3% over July 2017.  Pandora, meanwhile, has just under a 40% usage penetration rate and a 29% install penetration rate, up 8% over Spotify.

On smartphones, Android still has a sizeable lead over iOS devices in the United States.  As of June 2018, Android had a 54.1% market share while iOS has a 44.5% share.

Clearly, on its own, SoundCloud doesn’t have enough of a reach to convince more brands to buy more ad inventory.  At least in the US.

In the UK, Global – the largest commercial radio operator in the region – owns DAX.  The audio sales platform enables advertisers to directly access SoundCloud’s inventory programmatically.  DAX allows brands to measure the performance of their digital audio ad campaigns.

The indie streaming service’s deal extension with DAX will continue allowing advertisers a solid reach to a sizeable audience.

Ollie Dean, Director of Commercial Digital at Global, explains,

“Our ambition with SoundCloud is to give advertisers opportunities to align their brand with popular and emerging music loved by millions of listeners on SoundCloud.  DAX continues to grow at a phenomenal rate and programmatic advertising is becoming the preferred choice by many advertisers and producers.  With a huge music streaming catalog available on SoundCloud, this renewed partnership enables advertisers to reach new audiences at scale and drive brand awareness.”

Featured image by SoundCloud.

Now, you can view key metrics on just about any Pandora artist on Next Big Sound.

Before, only artists, managers, and record labels could measure the success of a musician on Pandora through key metrics.

Not anymore.

Pandora’s Next Big Sound Project has made artist data open to everyone – at least those on Next Big Sound.  Pandora acquired the data and analytics company in 2015.

Speaking on the announcement, Dan Wissinger, Senior Product Manager at Next Big Sound, confirmed users can now see Pandora metrics on artists.  He explained,

“In an industry where stream counts are an important measure of an artist’s success, the inaccessibility of this data publicly has meant that Pandora’s important role in many artists’ career trajectories has gone unnoticed.”

So, how does it work?

As stated earlier, Next Big Sound has previously allowed musicians, their managers, and record labels to view how successful they were on the digital radio service.  This allowed them to measure their success in the key North American market.

Explaining the feature, Wissinger uses Lil Donald, an Atlanta rapper, as a prime example.

On Spotify, the rapper has 250,000 monthly listeners.  His latest single, ‘Suicide,’ has over 100,000 plays on the Swedish streaming music service.  On YouTube, the single has over a million views and 80,000 streams on SoundCloud.

So, how about Pandora?

In the past 28 days, he’s had 2 million unique listeners enjoying his work on Pandora.  He also has over 4.5 million streams, up 48.52% over the previous month.

Lil Donald also outperformed his expected number of Thumbs Ups, revealing he had higher-than-expected audience engagement.  Yet, he’s also lost a large number of Thumbs Ups.

Pandora will also reveal how his releases have performed.

Breaking down streams in the second week of September, his tracks performed significantly worse than the previous week.  Only one song – ‘Back & Forth’ – saw a minor jump.

Pandora can also reveal whether listeners have merely listened passively or actively searched for his tracks.

Looking at the Reach Metrics for Lil Donald, you can see people have started shifting away from the artist.  He had significantly fewer track station adds, artist station adds, and fewer social media interactions.

Not exactly the kind of metrics you’d like Pandora to reveal to the public.

The company will also reveal the stage of the artist and whether the selected artists have strong audience engagement.

Looking at the big picture – What does Pandora really want?

Clearly, the service wants to remain relevant in the music industry.

Pandora still has a sizable lead over streaming music rivals in the US – at least in terms of overall users.  In 2017, the digital radio service had 76.3 million users, while Spotify had 46.3 million.

Yet, the service has taken a beating when it comes to key listener metrics, something executives have yet to admit.

Spotify, for example, now has a 21% install penetration rate on Android devices in the US, up 6% over last year.  While Pandora maintains the lead at 28%, this number has dropped in the past year.

Spotify’s usage penetration – the daily active user (DAU) rate – has also grown to 3.9%, nearly tying with Pandora.  People also spend more time on Spotify over Pandora each day – 28 minutes a day compared to Pandora’s 17.

According to SimilarWeb, Spotify has managed to grown thanks to a strong brand name.  Conversely, Pandora has fallen because it hasn’t found the way to engage with users.

So, how does Pandora plan to fight back and gain precious relevance in the music industry?  Simple.  Copying what its competitors have done and hope it works.

Two weeks ago, for example, Pandora launched its own ‘Release Radar.’  Dubbing it ‘The Drop,’ the digital radio service now offers custom playlists designed for premium on-demand subscribers.  Just like Spotify.

This comes almost a year after Pandora revealed its own ‘Freemium’ clone.  Copying its rival, the digital radio service now lets ad-supported users select and listen to the songs of their choice.  Only after watching a video ad.  Just like Spotify.

Whether it wants to admit it or not, Pandora is now losing relevance in the music industry.

With a significantly large global audience, Spotify for Artists already offers musicians and labels the engagement metrics they need.  Apple Music’s global audience continues to grow – so does its recently-launched artist metrics platform.  Even YouTube now has charts in 44 countries to measure an artist’s success.

So, why would anyone choose to measure an artist’s success from a clearly decaying digital radio service?

The only interesting thing to posit is how Next Big Sound could integrate with SiriusXM’s satellite radio service once the acquisition finalizes.  Could we eventually see SiriusXM stats integrated into Next Big Sound?

We’ll find out soon enough.

Featured image by Pandora.

SiriusXM’s Pandora acquisition could potentially open up new and unique opportunities for both artists and listeners.

Looks like SiriusXM has finally purchased Pandora Radio.

The $3.5 billion all-stock deal values Pandora at $10.14, 12% higher than its closing price on Friday.

A deal years in the making.

In 2015, Pandora Radio reported a heavy loss of $170 million.  That number more than doubled to $343 million a year later.

In short, the company was in a terrible position.

John Malone appeared, ready to swoop in and save the company.  There was just one problem – founder and former CEO Tim Westergren.

In 2017, Westergren vowed to turn Pandora Radio into a profitable company.  He didn’t.  After he refused to sell the company at $15 a share, John Malone and SiriusXM walked away from acquisition talks, calling Pandora “overvalued.”

The company didn’t fare well after SiriusXM walked away from acquisition talks.  Pandora’s stock fell below $8, a historic low for the company.  A study revealed teenagers and young adults had abandoned Westergren’s digital radio service in favor of Spotify.  To recover some desperately-needed cash, the company sold Ticketfly to Eventbrite for $200 million, just a little over a year after acquiring it for $450 million.

Then, after SiriusXM made a strategic investment in Pandora Radio for $480 million, Westergren’s fate was sealed.  After John Malone’s company added 3 members to Pandora’s Board of Directors, Tim Westergren stepped down.

Why Pandora needs SiriusXM.

Under Roger Lynch, the former CEO of Sling TV, things have only slightly improved at Pandora.

In the first quarter of 2018, Pandora posted better-than-expected financial results.  The company’s total subscription revenue skyrocketed 61.3% to $104.7 million.

Yet, looking closer, key metrics – including listener engagement – have plummeted.  At the end of Q1 2018, the digital radio service had 72.3 million active listeners.  During the same period last year, it had 76.7 million.  Total listener hours also fell nearly 5% year-over-year to 4.96 billion.

In the second quarter of 2018, Pandora reported $384.8 million in revenue, a 12% increase year-over-year.  Advertiser revenue per minute also reached $68.75, a new high for the company.

Yet, listening hours and active users continue to plummet.  Pandora had 71.4 million active users, down from 76 million year-over-year, and 5.09 billion listening hours, down from 5.22 billion last year.  The company now has 6 million subscribers.

SiriusXM, meanwhile, has over 33.5 million subscribers.

In its Q2 2018 report, the satellite radio service brought in $1.43 million in revenue, beating analysts’ expectations.  Average revenue per user (ARPU) increased 1% to $13.30.  Subscriber revenue also jumped to $1.14 billion, up 2.5% year-over-year.  SiriusXM added 429,000 new subscriptions along with 483,000 self-pay subscribers, which now totals 28.2 million.  The car penetration rate – SiriusXM’s key market – reached 75%.

SiriusXM’s long-term strategy.

With the acquisition, Liberty Media – which has a large stake in Live Nation – will expand its reach to a new digital audience.

SiriusXM CEO Jim Meyer explained in a conference call the acquisition will create “the world’s largest audio-entertainment company.”

Combined, SiriusXM will now have over 106 million monthly users.  The company will also have more than $7 billion in projected revenue this year.

According to Meyer, the satellite radio company aims to capitalize on cross-promotion opportunities on Pandora’s active user base.  SiriusXM will also leverage its existing exclusive content and programming on Pandora’s ad-supported and subscription tiers to create “unique audio packages.”

Per the announcement, the deal will reportedly create “the world’s largest audio-entertainment company.  Combined, the new company will have more than $7 billion in projected revenue in 2018.  SiriusXM will now have over 106 million monthly users.  With a large stake in Live Nation, Liberty Media could potentially create unique live entertainment opportunities for artists and listeners.

Yet, not everyone has reacted well to the news.

Following news of the acquisition, Pandora’s shares jumped 8.6% to $9.87.  Shares have since fallen to $8.95 after opening at $9.72.  SiriusXM’s stock also fell to $6.34 after opening at $6.69.

Pandora signs office lease in Atlanta.

Pandora Media has announced it will vacate its Atlantic Station offices following a deal for 50,000 square feet in the 21-story Campanile Tower in Midtown Atlanta.  The company announced earlier this year it would add 250 jobs in Atlanta.  Pandora had 40 employees at its Atlantic Station offices.  So far, Pandora has hired 100 people in the city this year.

Speaking with the Atlanta Journal Constitution, Mike McDonald, Head of Recruiting at Pandora, said,

“We found phenomenal tech talent in Atlanta, and our pace of hiring exceeded our expectations.  Based on that, we’re going to continue to hire aggressively [for product and engineering positions.]”

Stream the Made in America music festival on American Airlines.

Passengers flying on American Airlines during the upcoming Labor Day weekend can livestream the Made in America music festival on over 130 flights.  Per APEX Media, Roc Company partnered with the airline and Viasat, a communications company, to make the festival available in real-time.

Aretha Franklin tribute confirmed in Detroit.

Over 20 artists and activists will celebrate the life and legacy of Aretha Franklin at Chene Park Amphitheatre in Detroit on August 30^th.  The tribute is part of a four-day celebration of the Queen of Soul’s life and will include a public viewing August 28^th-29^th at the Charles H. Wright Museum of African American History.  The music event is free to the public but will require tickets for admission only available on Ticketmaster.com.

Judge sides with Commodores over Commodore.

A judge has ruled in favor of Commodores Entertainment Corporation (CEC).  Commodores Entertainment had sued founding member Thomas McClary for violating the company’s trademark and ignoring past court orders.  To promote his band and upcoming music festival appearances, he called his band ‘The Commodores Experience,’ ‘Commodores Experience,’ and ‘Commodore’s Experience’ on social media.  Florida Judge Roy B. Dalton ruled McClary had infringed on CEC’s trademark and likely confused concertgoers.

Sony denies ‘confirming’ fake Michael Jackson vocals.

Sony Music has hit back against articles stating the label confirmed 3 tracks in the 2010 album, Michael, contained fake Michael Jackson lead vocals.

Zia Modabber of Katten Muchin Rosenman LLP, the firm representing Sony Music and the Jackson Estate, stated,

“No one has conceded that Michael Jackson did not sing on the songs.  The hearing Tuesday was about whether the First Amendment protects Sony Music and the Estate and there has been no ruling on the issue of whose voice is on the recordings.”

”No, only I honored Aretha Franklin.  Not the rest of my band.  Just me.  Did you catch that?  Please print it again.  Make sure everyone knows.”

Journey guitarist Neal Schon has written a letter to the Tampa Bay Times, urging writers to write a correction stating only he paid tribute to Aretha Franklin during a recent performance.  Music critic Jay Cridlin had noted the band “scrolled photos of the late Aretha Franklin” behind Schon’s extended solo.  The guitarist then sent an email to Cridlin demanding a correction.

“The correct way to say [it’s] Journey’s Neal Schon did the tribute to Aretha Franklin.  That would be honest journalism of what it was and is.  The only ones that knew what I was planning were our lighting director and designer.  I often do something new EVERY NIGHT.  Nobody knows really what it will be.  It’s my solo section (by myself to do as I please) as Steve Smith and Jonathan Cain do every nite.  It’s called improv and that’s precisely why it’s different every night.”

Stereosonic founders launch a new music festival in partnership with Live Nation.

FestivalX, a dance and hip-hop music festival, will take place in four Australian cities this November and December.  The event will mark the start of the summer music festival season in the region.  FestivalX kicks off on November 29^th and will make stops in Brisbane on November 30^th and Sydney on December 1^st before wrapping up in Melbourne on December 2^nd.

Common inks a TV deal with Lionsgate.

Under terms of his new deal with Lionsgate Television, artist/actor Common will develop new series projects for the studio through his company, Freedom Road Productions.  He has starred in multiple Lionsgate film franchises, including John Wick and Now You See Me.

Columbia Records promotes Ryan Ruden.

Ryan Ruden will now serve as Senior Vice President of Experiential Marketing and Business Development.  He’ll pursue strategic marketing and business partnership along with driving revenue and innovation in artist development.  Ruden previously served as Vice President of Touring and Events.

Featured image by Pandora.

Have mobile messengers become the next frontier for the music industry?

Several months ago, Instagram unveiled a new feature.

Following long-term licensing deals with major labels and Merlin, Facebook launched music stickers on Instagram.  Users could now share a sticker of songs, playlists, and albums currently streaming on music apps, including Spotify.

The company has also launched a slew of other music features.  Sound Collection, for example, lets users insert licensed audio clips into Facebook and Instagram videos.  Lip Sync Live, a direct clone of Musical.ly, allows users to select a popular song and sing along to it.

Plus, the company most recently launched its own YouTube competitor, complete with monetization features for artists  – IGTV.

Not content with falling behind, Instagram competitor Snapchat has unveiled two new partnerships that may help it take on Facebook and Musical.ly head on.

Messaging with the sound of music.

TuneMoji, an app that allows users to send music GIFs with sound on messaging platforms, has partnered with Snap.

On the Snapchat app, users can now send GIFs with music for looping videos.  They can share music GIFs in a chat or a Snapchat story.  Snap has enabled the partnership via its SnapKit platform for developers.

Speaking about TuneMoji, James Fabricant, Founder and CEO, explained,

“Adding music to GIFs is the next logical step in the evolution of visual communication.  We initially started by creating TuneMojis ourselves, and quickly realized how much more effective it would be to empower a generation with the tools to produce their own MusicGIFs.  That infinite creativity is what now fuels the TuneMoji network.”

TuneMoji has licensing agreements with Universal Music, Universal Publishing, Warner, Sony/ATV, Warner/Chappell, and Impel/PRS, among other companies.  Based in London, the company has previously received around $6 million in funding from Sean Parker, will.i.am, and DJ David Guetta.

The move follows another recent Snapchat partnership.

Pandora will now allow Premium users to share their favorite songs, albums, stations, and playlists on Snapchat via music cards.

Here’s how the sharing feature works.  On the Pandora app, listeners can tap on the ‘Share’ option on the ‘Now Playing’ screen.  Then, after selecting ‘Snapchat,’ the app generates a unique music card.  Users can then share the music card directly to a friend, a Snapchat Story, or a group of friends.

Snapchat users in the US who receive the music cards will have direct access to Pandora’s entire music library.  Friends who view the Snap story or chat, for example, can listen to music on-demand through Pandora.  Non-Premium users, however, will have to view a 30-second ad to listen to 30 minutes of uninterrupted music.  On the plus side, Snapchat users won’t have to link their Pandora accounts to receive music cards.

As with TuneMoji, Snap has rolled out Pandora’s music cards feature in its SnapKit platform.

So, who stands to benefit from the recent partnerships?

All three companies.

First, Snap’s partnerships with TuneMoji and Pandora allow the company access to music sharing features without having to directly license music from the industry.  This means it won’t have to spend months negotiating royalties with major labels and indies.  So, it won’t have to pay to license individual songs for use, which is great news for investors.

Following a dismal Q2 2018, Snap desperately needs a way to turn its fortunes around.  The company reported a net loss of $353 million for the three months ending June 30^th, 2018.  It’s also lost 3 million daily active users, down now to 188 million.  With the TuneMoji and Pandora deals, Snap may now be in a better, more cost-effective position to compete against Instagram and Musical.ly.

Second, Pandora now has access to a potentially large user base in the United States.

The Snapchat partnership follows a recent deal with US carrier T-Mobile.  Starting next week, T-Mobile Unlimited subscribers will receive a year free of Pandora Plus.  Between its Premium and Plus subscriptions, Pandora has 5.63 million subscribers.  So, with most Snapchat users not paying for Pandora, expect the service to earn more from ad viewership.

Third, TuneMoji’s user base, install rate, and revenue will increase.

As with Pandora’s music cards, Snapchat users will have to install TuneMoji on their devices to send music GIFs.  According to mobile app market tracker Sensor Tower, TuneMoji had around 40,000 downloads on iOS devices worldwide in July.  The app had around 50,000 on Android devices.  On both mobile operating systems, the app makes under $5,000 a month.  The company reportedly has over 20 million users.

Featured image by Snapchat.

Patreon acquires Memberful.

Patreon has acquired Memberful, a white-labeled membership service.  The move will allow content creators to manage a membership program under their name and on their website.

Pandora could launch its Podcast Genome Project at the end of this year.

Pandora CEO Roger Lynch has confirmed the company will launch its Podcast Genome Project later this year.  The project will help users find podcasts based on the characteristics of each show and tailored to their interests.

Speaking with The Verge, Lynch said,

“There’s a lot of work going on behind the scenes.  It’s something that we plan to launch by the end of this year.”

Final arrest made in connection to XXXTentacion’s murder.

The Broward County Sheriff’s Office has announced the arrest of the final suspect in the murder of XXXTentacion.  Police took Trayvon Newsome into custody and booked him on charges of first-degree murder.  He surrendered to deputies at his lawyer’s office in Fort Lauderdale.  Police had previously arrested three suspects in connection to the rapper’s murder – Dederick Devonshay Williams, Michael Boatwright, and Robert Allen.

Bob Dylan announces US tour dates.

The American leg of Bob Dylan’s Neverending Tour will kick off in Midland, Texas on October 9^th.  The 25-stop US tour will wrap up in Richmond, Kentucky on November 11^th.

Hard Summer Festival wraps up with 1 death and 23 hospitalized.

A 19-year-old male festivalgoer has passed away and 2 women remain hospitalized following the end of the Hard Summer music festival in Fontana, California.  The cause of death remains undetermined.  23 other attendees were also taken to the hospital.

The San Bernardino County Sheriff’s Department attributed the hospitalizations to extreme heat, which reached over 100 degrees during the festival.  Police also arrested 11 people, mostly on drug charges.

Live Nation will operate a new venue in Portland.

Live Nation Entertainment has signed a long-term lease to operate a new concert venue at the Lloyd Center in Portland.  Located on the top floor of the former Nordstrom building, the venue will have a box office on the first floor, updated lighting and sound technology, bars, lounge areas, and additional accommodations.

Move Management launched.

Move Concerts, Latin America’s largest independent concert promoter, has partnered with 70MIL, an Argentine agency, to launch a new joint venture, Move Management.  Argentine singer/songwriter Abel Pintos is the company’s first client.

Joel Klaiman leaves Columbia Records.

Columbia Records Executive Vice President and General Manager Joel Klaiman will leave the label.  He oversaw marketing, digital marketing, promotion, publicity, branding, sync licensing, video production, and content development operations.  Klaiman’s announcement follows other recent exits at Columbia – Jon Borris (Senior Vice President of Pop Promotion), Mark Williams (A&R Executive), and Doneen Lombardi (Executive Vice President of Marketing).

UMG signs Billie Eilish.

Universal Music Group (UMG) has signed Billie Eilish, and there’s apparently a huge advance.  TMZ reports the 16-year-old singer has received a cash advance of $2.6 million on her music.  If UMG extends the deal beyond the initial 3-year term, she’ll receive up to $7 million.  Eilish first launched her career on SoundCloud 2 years ago.

INgrooves makes five hires.

INgrooves, a distribution and marketing services company, has announced five new personnel.

Alex Montes-Flores will serve as Senior Manager of Latin Label Development.  Based in Los Angeles, he’ll oversee the company’s Latin, Caribbean, and Reggae label roster.  Montes-Flores recently served as Head of Sales and Marketing at Nacional Records.

Meka Udoh will serve as Manager of Urban Marketing.  He’ll work alongside account managers, label development managers, and the engagement team.  Udoh, who is also a journalist and DJ, co-founded hip-hop site 2DopeBoyz.

Sheneza Mohammed will serve as Label Development Manager.  Based in Los Angeles, she’ll oversee the company’s roster of label partners.

Joshua Hedglin will serve as Manager of Label and Business Development.  Based in London, he’ll oversee INgrooves’ roster of UK and European EDM labels and will bring in label partners.

Emmy Buckingham will serve as Manager of Label and Business Development.  Based in London, she’ll oversee INgrooves’ roster of UK and European label partners.  Buckingham previously worked at the Association of Independent Music (AIM).

Steve Bogdanovich passes away.

Steve ‘Bogie’ Bogdanovich, former Vice President and Production Manager of Romeo Entertainment Group, has passed away.  He was 66.  Bogdanovich had served at Romeo Entertainment Group since 2001, overseeing event productions in the US.

Major labels and tech companies now earn billions from artists’ work.  Well, here’s a small consolation – at least they get to keep the breadcrumbs.

Earlier today, for the period ended June 30^th, 2018, Warner Music Group (WMG) CEO Steve Cooper revealed that digital revenue – fueled mostly by growing streaming music – now represents 60.1% of WMG’s total revenue.  In its Q1 / calendar Q2 2018 report, Sony Music revealed that digital revenue – again, powered mostly by streaming – makes up 63% of its total revenue.  Finally, Vivendi, Universal Music Group’s (UMG) parent company, revealed the label generated $1.44 billion in streaming revenue for the first half of 2018.

The Big 3 – Sony Music, WMG, and UMG – now earn billions each year from the explosive rise in streaming music services.  Of course, they earn billions more each year from touring, merchandise, and other revenue streams.

This naturally begs the question – just how much do they actually share with artists?

A new report reveals that yes, major labels – and now tech companies – keep a major slice of the music revenue pie.  And no, artists shouldn’t expect to make a living from streaming music revenue.  Nor pretty much any other music-related source of income.

12% – just shy of a baker’s dozen.

In its recent Citi GPS report, Citigroup revealed musicians received only 12% of the $43 billion generated in sales from their work last year in the US.  The figures include CD sales revenue, streaming music, YouTube ads, radio royalties, and concert tickets.  That number is up just 5% from 2000.

So, who keeps the money?  Tech companies, radio stations, and record labels get the largest share.

Citigroup found that last year, music sales included over $15 billion in ad revenue.

Consumer spending for subscriptions, CDs, and concert tickets also generated over $20 billion.

Of these amounts, labels and publishers received nearly $10 billion.  How about artists?  Around $5 billion.

Citigroup analyst Jason Bazinet co-authored the report.

Speaking about the depressing amount musicians actually receive from their work, he revealed artists don’t receive “their fair share of the economics.”

He started the report to discover whether artists truly receive as little pay as they claim.  Bezinet gave a not-so-surprising answer.

“The answer is yes.”

But, does a solution exist?

According to Bloomberg’s Lucas Shaw, yes.

All artists need to do is forgo record deals in favor of streaming music services like Apple Music and Spotify.

Citing Spotify as an example, Shaw writes that the company has given young artists “money to support the development of their careers.”  Spotify has recently offered direct licensing for indie artists with cash advances (though we haven’t seen any confirmed deals yet).

But that could cause a serious backlash.  And Shaw didn’t explain that Spotify’s offer caused an small uproar among the Big 3.   In fact, we’ve heard that major label executives have privately threatened to retaliate against Spotify for poaching hot artists, starting at the negotiating table.

Yet, the controversy may not ultimately affect musicians.  Speaking about the long-term impact of Spotify’s direct licensing deals, industry consultant Vickie Nauman explained that it could force major labels to give artists “more favorable deals.”

Speaking with Shaw, Nauman also elaborated on why artists receive so little.

“Because the music industry has so many intermediaries – and because the consumption of music is so fragmented across various platforms – the artist captures very little of the aggregate revenues.”

So is streaming truly beneficial?

Independent musicians and artists often share their actual streaming payouts with Digital Music News.  In fact, we happily invite them to.  And, the answer, quite frankly, is no.

Just look at some notable examples.  Zoe Keating, an award-winning cellist and composer, earned just $4,388.93 from nearly 1.2 million streams on Spotify.  From about a million streams, David Crosby reportedly earns $4,370 on the same service.

So, no, don’t expect to pay next month’s rent just by embracing Spotify.  Nor Apple Music or any other streaming music platform.

Yet, Citigroup’s report underscores a truly alarming fact.  Record labels and major music companies continue to rake in billions from artists’ work.  And, no matter what their representatives may say, no, musicians still don’t receive their fair share.

And, from the looks of it, they may never receive it.  Not anytime soon, at least.

You can check out the complete report here.

Unedited featured image by Joe The Goat Farmer (CC by 2.0)

‘We Shall Overcome’ publisher can’t easily overcome its legal fees.

US District Judge Denise Cote has ordered Ludlow Music to pay $352,000 in legal fees as it protected its hit song, ‘We Shall Overcome’ in court.  The publisher had vigorously claimed the track didn’t belong in the public domain.  Ludlow backed off the claim earlier this year.

William Preucil, under fire for alleged sexual assault, resigns.

Cleveland Orchestra violinist William Preucil has resigned after serving for more than 20 years.  The move comes days after The Washington Post published a damning report.  In 1998, Preucil allegedly forced violinist Zeneba Bowers – then 26 – to undress following a lesson.  He aggressively kissed her and pushed her down onto a bed.  The Cleveland Orchestra had suspended Preucil on Friday.  Two days later, he presented his resignation.

Vampire Weekend jumps ship from XL Recordings to Sony.

Vampire Weekend, an indie pop band, has signed with Sony.  The company confirmed the news in its Q1 / calendar Q2 2018 financial report, listing the band’s next project for the quarter ending September 30^th.

Will Apple reach $1 trillion first?

Following better-than-expected Q3 2018 financial results, Apple ended yesterday’s trading day with a market value of $935.3 billion.  In after-hours trading, investors sent the company’s stock up 4% ($7.31).  Apple had generated $53.3 billion in revenue for the quarter ended June 30^th.  Analysts had expected $52.37 billion.  Net income reached $11.52 billion, meaning diluted earnings per share totaled $2.34.  Analysts expected $2.18.

Spotify unveils its new winning strategy – Archie comics?

Spotify has teamed with Nerdist to stream Archie motion comics.  Titled Spotlight Archie – The New Riverdale, the six-episode video series will feature music and voice acting.

Big Hit and CJ team up for joint K-Pop venture.

CJ E&M, a South Korean entertainment conglomerate, will launch a joint K-Pop music company venture with Big Hit Entertainment, BTS’ agency.  CJ will provide 51% of the ₩7 billion ($6.25 million) starting capital.  Tentatively dubbed Belief, the joint venture will reportedly discover and train new talent as global idol bands.

Looks like eMusic forgot to pay labels while pushing for its $70 million ICO.

Struggling download platform eMusic has reportedly failed to pay independent distributor The Orchard, forcing the latter company to take down all of its content from the platform.  Instead of paying The Orchard what it owes, eMusic has pursued a questionable $70 million ICO.  The download store aims to offer a new blockchain token so users can purchase downloads.  It has yet to present a viable business plan.

Spotify exits AdsWizz following Pandora acquisition.

Shortly after Pandora’s Q2 2018 earnings call, Spotify has confirmed it has ended its relationship with AdsWizz.  The announcement comes several months after Pandora acquired the programmatic audio platform for $145 million.

In a statement to AdExchange, a Spotify spokesperson explained,

“We did sunset our partnership with AdsWizz.  That being said, we remain dedicated to offering advertisers automated solutions to access our engaged audience and quality inventory, which continues to be available in the programmatic ecosystem through Rubicon Project and AppNexus as well our self-service ad platform, Spotify Ad Studio.”

Prepare to receive clothing recommendations based on your Spotify listening data.

Julian Eison, CEO of San Francisco custom luxury menswear store Eison Triple Thread, has debuted an app that recommends clothes based on users’ Spotify data.  Dubbed FITS, Eison told Racked, a Vox Media fashion and lifestyle blog,

“It’s a unique take on the recommendation engine that everybody else is using because you can infer a lot from people’s music choices.  We start with Spotify information to understand the emotions behind your style choice, and we’ll eventually get the looks that fit you best.”

Stream your favorite classical music.

Primephonic, a Dutch classical streaming music service, has launched.  The service went live today in the Netherlands, the UK, and the US.  Primephonic features the full works of 500 composers, including Bach.  Primephonic first launched as a classical music download store but failed to gain traction due to the decline of the global download market.

Pusha T cancels numerous tour dates.

Bronx rapper Pusha T has canceled 9 upcoming performances of his previously 19-stop Daytona Tour.  He canceled stops in St. Louis, Grand Rapids, Cincinnati, Cleveland, Silver Spring, North Myrtle Beach, Charlotte, San Antonio, and Dallas.  Venues in Milwaukee and Kansas City have also reported cancelations according to HipHopDX.  The tour would’ve kicked off in Milwaukee on August 2^nd and wrapped up in Paris on December 14^th.

Vibe Tickets hires Hannah Morris.

Hannah Morris, former Head of Sales in the UK and the Republic of Ireland, has joined Vibe Tickets as Commercial Director.  Based in London, she’ll lead the secondary ticketing platform’s commercial strategy and accelerate its monetization plans.  Following forced administration over cash problems last May, Vice Tickets recently relaunched as a limited company.

Istanbul Jazz Festival announces a key promotion.

Istanbul Jazz Festival has named Harun İzer as its new Festival Director.  He replaces Pelin Opcin who jumped ship to Serious, producer of the London Jazz Fest, last January to serve as Director of Programming.  Prior to his promotion, İzer had served as Assistant Director since 2011.

Allison Kaye receives a promotion.

SB Projects has promoted Allison Kaye as President.  She previously served as President of Music, overseeing the company’s daily music operations, including artist management, Schoolboy Records, and the Sheba Publishing joint venture with Universal Music Group.  Kaye’s work now includes TV, film, social good, technology, and lifestyle, among SB Projects’ other properties.

Family and friends save Two Feet’s life reach him in time following suicide tweet.

Zachary ‘Bill’ Dess – best known as Two Feet – has been hospitalized.  He sent out a now-deleted tweet stating he “didn’t feel like living anymore” and saying “goodbye” to his friends and family.  Dess suffers from schizophrenia.  His father wrote on Two Feet’s account,

“Bill is recuperating and being held for observation.  He will survive.  Thanks to everyone for their heartfelt concern.  This is a very difficult time for us.  We appreciate the outpouring of love. – His father.”

The Lede Company poaches Dvora Vener Englefield from 42 West and Cara Hutchinson from Rogers & Cowan.

The Lede Company has named Dvora Vener Englefield, a veteran public relations strategist, as Partner and Head of the company’s music division.  Her clients include John Legend, Camila Cabello, and Shawn Mendes.  Englefield spent eight years at 42 West.

Cara Hutchinson has also joined The Lede Company.  She had served at Rogers & Cowan as Vice President and worked with The Rolling Stones, Elton John, and Lionel Richie.  Hutchinson also handled publicity for tours including Katy Perry and Adam Lambert.

UMPG’s Mark Coltman receives a promotion.

Universal Music Publishing Group (UMPG) has promoted Mark Coltman to Executive Vice President of Information Technology.  Based out of London, he’ll report to JW Beekman, Chief Financial Officer of Worldwide, and John Reston, Executive Vice President of Global Administration.  Coltman will drive IT strategy and oversee application development and maintenance across UMPG.

Fewer young people are pirating content.

According to a new report from the UK’s Intellectual Property Office (IPO), piracy has dropped 7% among 16-to-24-year-olds since 2015.  Over half now subscribe to an online video service, including Netflix and Amazon Prime.  The report also reveals the UK has a lower overall copyright infringement rate (25%) than Canada (26%) and Australia (38%).

Nope, YouTube still isn’t safe, says Sky.

Eighteen months after it had pulled its advertising from YouTube, Sky has yet to return to the platform.  At the Incorporated Society of British Advertisers’ (ISBA) annual luncheon, CEO Stephen van Rooyen lambasted Google’s ‘cleanup’ efforts.

“We only put money where we understand how it’s being spent.  The debate around YouTube is no longer a debate; we will not go onto YouTube when there’s just not the level of brand safety that we need.

The company had pulled advertising from the platform after The Times revealed YouTube monetized terrorist and hate-filled videos.  The Times, along with the BBC, would later find the popular online video platform failed to adequately stop predatory comments on videos featuring young children.

Even more trouble for Tana Mongeau.

Popular YouTuber Tana Mongeau has come under fire once more for her ill-fated convention TanaCon.  A new video interview with the star has revealed she had purposefully planned for long lines at the first-annual event.  When told about the possibility of overcrowding prior to the event’s start, Mongeau said,

“It would be really, really cool to have people, like, outside waiting to get in.”

She then added, “People love to feel oppressed outside.”  The move to keep fans waiting ultimately led to some attendees fainting due to the long wait and intense heat.  Mongeau has since backtracked, calling her statements a “joke.”

Stony Plains signs admin deal with Linus Entertainment.

Stony Plain Records, a Canadian indie roots label, has signed an administration rights deal with Stony Plans Rights, a division of distributor Linus Entertainment.  The deal covers the label’s catalog of roots and blues music spanning over thirty years.

James Mtume sues Sony Music for rights over his works.

Soul musician James Mtume has sued Sony Music to reclaim the rights to works he created between 1978 and 1983.  These include ‘Juicy Fruit’ and ‘Just Funnin’.”  A rep for Sony Music had no comment.

Ozzy Osbourne’s lawyers fight back against AEG’s motion to dismiss anti-trust suit.

Lawyers for Ozzy Osbourne have called AEG’s recent motion to dismiss his anti-trust lawsuit “baseless on the facts and law alike.”  In a rebuttal to the motion, Dan Wall, Osbourne’s lawyer, wrote,

“Factually, AEG misrepresents its own practices with respect to the tying requirement it enforces.  The formal venue hire agreement for the O2 referenced in the Staples Center Commitment unambiguously requires the promoter to ensure that the artist plays Staples when in Los Angeles.”

Osbourne had sued AEG earlier this year after the promoter blocked Osbourne from performing at the O2 Arena after refusing to first perform at the Staples Center.

Netflix announces romantic musical drama.

Netflix will produce a new series about music called Mixtape.  The company has described the show as “a romantic musical drama that looks at the love stories connecting a diverse, disparate group of people in contemporary Los Angeles through the music that lives inside their hearts and minds.”  Director Jesse Peretz will helm the pilot.  Callie Hernandez will play a lead character.

Everything Is Love CD drops on June 6^th.

Beyoncé and Jay-Z have announced a physical release of their digital-only album, Everything Is Love.  The album will drop at retailers on Friday, June 6^th.

Montreal International Jazz Festival cancels ‘SLAV’ shows.

Amidst widespread criticism, the Montreal International Jazz Festival has canceled its remaining presentations of controversial ‘SLAV’ performances.  The shows had cast white singers as black slaves.  The move comes a day after Moses Sumney, a US musician, canceled a gig at the jazz festival in protest.  75 protestors had also staged a demonstration outside the theatre hosting the performance.  In a statement, a spokesperson for the festival said,

“For the Festival International de Jazz de Montreal, inclusion and reconciliation between communities is essential.  We made the decision with the artist Betty Bonifassi to cancel all performances of the show at the festival.”

Sticky Fingers removed from This That festival.

This That festival organizers have removed Australian indie rock band Sticky Fingers as headliners.  A Sydney pub had ejected the band’s frontman following a verbal altercation with a transgender model in May.  A spokesperson said the decision came after “long discussions.”

“Sticky Fingers agreed with This That from the start that if their inclusion began to impact negatively on the other artists performing and our Newcastle and wider communities, that it would be best if they refrain from performing.  That’s the decision we have both taken today.”

Ticket Summit moves to Caesars Palace.

Ticket Summit, a conference and trade show for ticketing and live entertainment professionals, has moved to Caesars Palace in Las Vegas.  The three-day conference kicks off on Monday, July 16^th.  This year’s event will feature two keynote panels – Worldwide Trends in Live Events and The Ticketing Industry.  Last year’s event was held at The Venetian.

Ontario government suspends provision capping secondary ticket prices.

The Ontario government has removed a provision in its anti-scalping law that kept a ceiling price on scalped tickets.  The Office of Premier Doug Ford confirmed that his government suspended the portion of the law that capped resold tickets to 50% of face value.  A spokesperson for Ford said in a statement,

“The previous government attempted to institute a cap on ticket resales with no way to enforce that cap, resulting in less consumer protection.  We have paused the implementation of this section until we can review this provision in full to make sure it is in the best interest of Ontarians.”

New Zealand court finds Kim Dotcom can be extradited to the US.

New Zealand’s Court of Appeals has ruled the US can extradite MegaUpload founder Kim Dotcom and three former colleagues to face charges of copyright crimes.  Charges against the beleaguered founder include fraud and willful copyright infringement.  Dotcom has now appealed to New Zealand’s Supreme Court.

Idris Elba launches 7Wallace Music.

Actor Idris Elba has launched his own record label.  Dubbed 7Wallace Music, the label has already signed its first client – French hip-hop artist James BKS.

Peermusic acquires Accorder Music Publishing.

Peermusic has acquired Accorder Music Publishing, a UK-based indie film and TV publisher.  Terms of the deal were not disclosed.  Accorder Music has represented a roster of composers for shows including Great British Bake Off, River Monsters, The Great American Read, and Teletubbies, among others.

Paul McCartney unveils first four stops of his world tour.

Paul McCartney has announced the first round of dates for his upcoming Freshen Up World Tour.  The tour kicks off on September 17^th in Quebec City.  Tickets go on sale July 13^th.

Islander’s backstage antics end in band’s removal from Vans Warped Tour.

The Vans Warped Tour has removed Islander, a nu metal band, from the tour.  The decision came after the group’s frontman, Mikey Carvajal, damaged a backline drum kit during a performance.

In a video statement, Carvajal told fans,

“We just wanted to say to anybody that planned to come out and hang out with us at Vans Warped Tour, we’re not going to be able to be there unfortunately because we goofed up today.  During the last song of our set, I dove into the drum kit, just some of that punk rock energy that I’ve got just ran through my veins, and I didn’t even think about the fact that we were using a backline kit that didn’t belong to us.  I ended up putting a dent in one of the floor toms, so we’ve been asked to be removed from Warped Tour.”

Dean Webb passes away.

Dean Webb, a popular bluegrass mandolin player, has passed away.  He was 81.  Webb formed The Dillards in 1962 and bluegrass band Missouri Boatride in 2009.  He also appeared on The Andy Griffith Show.

Tina Turner’s eldest son passes away.

Tina Turner’s eldest son, Craig Turner, has reportedly passed away following a suicide attempt.  He was 59.  Turner had worked as a real estate agent in the San Fernando Valley.

Featured image by Pascal (CC by 2.0)

Major labels are still almighty — but indie labels are bringing in some serious business.  Like, $500 million+ in annual business.

Major labels still dominate streaming platforms and boast the biggest artists.  But indie labels are gaining incredible traction — and taking huge advantage of digital platforms.  According to Merlin, an organization that represents indie labels in negotiations with digital music providers like Spotify, Pandora, and Apple, indie labels are just shy of earning $500 million in annual collections.

The half-a-billion figure was recently reported by Billboard.  And that’s part of a fast-growing pie.  According to longtime Merlin chief Charles Caldas, the consortium has paid out $1 billion to member companies in the first nine years of operation.

Nine years ago, the industry — and indie labels — were struggling through a pretty difficult patch.  Of course, 2018 has been entirely different.  Just recently, that pie got a whole lot bigger with Spotify’s ‘non-IPO’.  Shortly after the company went public, Merlin cashed its shares and distributed the winnings to members.

The consortium held an estimated 1% piece of the pie.

Merlin’s large collection of indie labels sits at a comfortable 800 members, with 20,000 labels and imprints throughout 55 countries.  “Ten years ago, when we sat down and we were considering what Merlin would look like one day, I would have been happy if we could get to $10 million one day,” Merlin CEO Charles Caldas told Billboard.

+ Merlin Just Licensed 90% of China’s Legitimate Digital Music Market

Caldas credited far-flung countries like Brazil for helping to boost earnings.  Just recently, Merlin inked a series of broad-reaching deals with Chinese streaming platforms.  That included Xiami (Alibaba), NetEase Cloud Music, and Tencent’s QQ Music, Kugou and Kuwo, which comprise roughly 90% of the Chinese digital music market.

Effectively, the formation of Merlin has almost created a ‘fourth label,’ with negotiating power that can’t be ignored.  Indeed, the cooperative coordination has led to some serious negotiation wins, with streaming platforms simply unable to undercut indie labels.

What are people really looking for?

Spotify gets the most attention — and paying subscribers.  But if search analytics can predict the future, YouTube, Amazon, and Apple are just getting started.

YouTube Music hasn’t even launched yet.  And Spotify has more than 70 million paying subscribers. But when it comes to search, YouTube is already winning.

For years, YouTube has easily been the biggest music platform.  And a big part of that success is coming from search traffic.  In fact, the search data indicates that this may be YouTube Music’s game to lose.

We asked search and SEO analytics firm SEMRush to do a deep-dive on music platforms and services, particularly on the streaming side.  Here’s what they discovered.

Breaking down search volumes for the most popular music provider in the US between February 2018 to April 2018, YouTube had 2.24 million unique search requests.  Amazon Music and Apple Music took the second and third spots with 823,000 and 368,000, respectively.  Despite CEO Roger Lynch’s lofty claim about the digital radio service “No. 1” position in the market, Pandora only had 246,000 unique search requests.

Surprisingly, Spotify took the last spot with just 110,000 searches.

At first glance, this appears to be great news for Google’s upcoming streaming music platform, YouTube Music.

After all, with now over 1.4 billion users on its popular video platform, how could Google possibly fail to line up millions of subscribers?  But here’s the bad news for Google.  When people look for music listening apps, they don’t search for YouTube very often.  In fact, according to SEMRush, under brand music app searches, music fans typically search for Amazon.

The Amazon Music app had 27,100 unique searches in the US.  Pandora fared slightly better this time with 14,800 searches.  YouTube took third with 12,100, followed by Spotify Music with 9,900 and Apple Music with 4,400.

In a large number of cases, people prefer to use apps from reputable companies over untrustworthy third-party apps.

The analytics firm found that users preferred searching for “free music apps” over “download music apps.”  So, what’s the difference?

Well, searching for “free music apps” will pull up well-known music apps, including SoundCloud and Pandora.

Searching for “download music apps” instead will pull up relatively obscure third-party apps.  These apps are usually stuffed with ads and malware, making users wary of installing them.

Looking at the research, ‘free music apps’ from reputable companies and streaming platforms had a consistently stronger search volume.

Compare that to the waning popularity of sketchy third-party music downloader apps.  Just two months ago, unique searches reached just under 30,000.

Data scientists also found that searches for music apps featuring offline functionality have actually grown in popularity.

Under this search category, you’ll find Spotify, Google Play Music, Apple Music, and Microsoft’s now-defunct Groove Music.

iPhone users were also more likely to search for (and subsequently use) streaming and download music apps over those on Android devices.

With the launch of Premium Family, Pandora has now rolled out a service eerily similar to Spotify and Apple Music’s family plans.

Pandora Radio has quietly rolled out its new Premium Family plan for $14.99 a month.

The plan allows six different Pandora accounts to use Premium features.  This includes the ability to download your music offline, create radio stations and custom playlists, and download music for offline listening.

Of course, Spotify and Apple Music have already launched similar plans years ago.  And they have much larger audiences.

The Premium Family plan marks yet another attempt by the digital radio service to finally convert its over 80 million monthly free listeners to paid subscription plans.  The digital radio service first launched its Premium service last year using assets acquired from Rdio.  Speaking with CNBC, former CEO and co-founder Tim Westergren touted the service as “the true premium streaming product in the market.”

“I am confident about our ability in this space.  These are early days in the subscription of music.  And listeners don’t know what a real premium product looks like yet, and that’s what Pandora is.”

So, what makes Pandora Premium so different from Spotify and Apple Music’s respective plans?

At first glance, not much really.

In addition to the features outlined earlier, up to six users can use skip and replay songs.  They can also listen to higher quality music.

Just like on Spotify and Apple Music.

At least with Pandora, family members will access a new feature – “Our Soundtrack.”  Here, the regularly-updated playlist combines each person’s music tastes.

So, if your uncle absolutely loves country music, your aunt techno, and your son hip-hop, you’ll get a truly unique blend of music.  Sounds good, right?

No, not really.

So, why exactly has Pandora launched Premium Family?

The reason is that Pandora is now playing catch-up in a streaming space that suddenly has paying subscribers.  But given the dramatic lead of Spotify and Apple Music, perhaps a few more differentiating features and options are needed.

Featured image by Haldean Brown (CC by 2.0)

Pandora Media’s Q1 2018 may look great at first.  But, just look a little closer.

Pandora Media has reported better-than-expected first quarter financial results.  The company posted a lower quarterly loss thanks to higher subscription revenue and smaller declines in advertising.

Breaking down the numbers, Pandora Media’s total subscription revenue skyrocketed 61.3% to $104.7 million.  Analysts had expected $104.6 million.  Pandora’s advertising revenue also dropped just 3.9% to $214.6 million.  Analysts had expected a larger drop totaling $198.7 million.

In addition, Pandora posted a loss of 27 cents per share, beating estimates of 38 cents per share.  Total revenue had also jumped to $319.2 million.  Analysts had expected $304.3 million.

The news sent the stock up 8% in after-hours trading yesterday.  In fact, on Friday, Pandora Media shares had its best day in years.  Jubilant investors helped push the stock up 19.20%, or $1.11.  This marks the company’s largest percentage gain since it went public 7 years ago.

So, has Pandora finally managed to turn things around?

Speaking on the company’s Q1 2018 results, Roger Lynch, Pandora’s Chief Executive Officer, attributed the positive results to “new marketing initiatives.”  Instead of focusing on mass subscriptions through brand marketing – just look at Spotify’s dismal Q1 2018 results – Lynch has conducted data-based marketing.

Data-based marketing allows Pandora to gauge users’ listening preferences.  This, in turn, allows it to implement strategies to lure users into spending more time on the service.

The results speak for themselves.  Pandora ended the first quarter of 2018 with 5.63 million paying subscribers.  Year-over-year, Lynch single-handedly managed to grow the company’s subscriber base 19%.  In addition, compared to Q1 2017’s $64.88 million, subscription revenue grew 61.4%.  Lynch claims that March marked the first time in over a year that “lapsed users” have returned to the service.

No.  No, it hasn’t.

I’ll give Pandora Media and Lynch credit where credit is due.  After five months of shares hopelessly stuck below the $5 mark, Pandora –against all odds – has managed to impress analysts enough with better-than-expected numbers.  Now, investors remain optimistic about the company’s long-term future.

Yet, just dig a bit deeper into Pandora’s Q1 2018 earnings.  You’ll find one fact that continues to haunt the company after 18 years on the market: Pandora has yet to turn a profit.  Even worse, it may not even know how.  And, the company’s new strategy may ultimately put the final nail on its coffin.

Pandora Media’s net loss grew to $131.7 million, a slight 0.5% drop year-over-year.  Adjusted EBITDA was also a loss of $73.3 million, a 2.8% increase over the same quarter last year.

Pandora’s overall engagement has also declined.  At the end of Q1 2018, the digital radio service had 72.3 million active listeners.  Last year, it had 76.7 million.  Total listener hours also dropped to 4.96 billion, down nearly 5% year-over-year.

In addition, research firms have shown that Pandora has started losing its core audience.  The digital radio service recently topped Triton Digital’s February 2018 Top 20 Ranker for digital audio with 2.53 million average active sessions.  Yet, Spotify came in second place with just 37,000 average active sessions behind Pandora.  In the following months, Triton Digital hinted that the European streaming music service may take first place.

The numbers don’t appear to alarm Lynch.  In fact, he appears to have a rebound strategy all lined up.

Going all-in on Freemium.

Pandora will reportedly increase its marketing spending in the next quarter.  The company has now placed a greater emphasis on its ad-supported service.  In exchange for viewing a certain amount of video ads, freemium users will unlock Pandora’s on-demand premium listening features.

This strategy clearly hasn’t worked for Spotify.  The European service’s Q1 2018 revealed a 22% drop in ad-supported revenue over the fourth quarter of 2017.  Disillusioned investors punished the stock.  On Wednesday afternoon, Spotify’s stock sat comfortably at $170.  Now, two days later, Spotify shares have plummeted nearly 9%.  It’s currently limping along at $154.26,  So, why does Lynch believe it’ll work for his company?

Simple.  Because it has to.

Content licensing fees for paid users grew 57% year-over-year, from $2.96 to $4.95.  According to Variety, the company now makes less money from paying users.  So, what’s Pandora’s strategy?  To provide a faux ad-supported ‘Premium experience.’ Basically, pulling the wool over freemium listeners’ eyes.  They end up listening to ads believing that they’re saving money on a streaming music subscription.  And, Lynch and Pandora desperately collect as much as they can from advertising revenue, lest share prices should fall below $5 once more.

If successful, the company will ultimately pay less on content licensing fees and earn a lot more on advertising.  But, one key question remains: With plummeting listenership and fewer average active sessions each passing year, will this strategy actually work?  According to Lynch, of course! He eagerly told investors during the company’s earnings call yesterday,

“I really, really like the fact that we have a balanced model between advertising and subscription.”

Historically, however, Pandora has merely repeated the same mistakes it’s always made.

Co-founder and former CEO Tim Westergren promised investors that the company would finally turn a profit in 2017.  Tim Westergren no longer works at the company.

Will Roger Lynch prove any different?

Featured image by Petteri Sulonen (CC by 2.0)

So, how much does Zoe Keating make from streaming?

Every now and then, Digital Music News covers what real artists make from streaming platforms.

One artist last year, for example, made just €403.27, or $470.47, on Spotify from 122,364 total plays.  Last June, after fans streamed another artist’s songs 4.3 million times on the platform, TuneCore only sent a check for $5,078.  And, one more artist, after reading a separate piece on average per-stream payouts for 1 million plays, couldn’t get paid despite hitting 100,000 streams.

Canadian-born cellist and composer Zoe Keating has her catalog available on multiple streaming music platforms.  The recipient of the 2009 Performing Arts Award, she recently reached out to Digital Music News to share her royalties.  Today, we’ll rank the streaming platforms from the best to worst reported per-stream rates.

Using RouteNote as her distributor, Keating earned the most from Amazon Prime Music.  At a per-stream rate of $0.0663649, Keating earned $1,265.38 from 19,067 streams on the platform.

Microsoft’s defunct Groove platform, labeled here Xbox Music, had the second highest per-stream rate at $0.0319997.  Keating scored $502.94 from 15,717 plays.  TIDAL, labeled here Wimp, paid $0.0162451 per stream.  She received $354.42 from 21,817 streams.

Deezer, Spotify, and Prime Music ranked as the streaming music platforms with the lowest per-stream rates.  Deezer paid out $0.0048416 per play.  After just 20,460 streams on the French-based music streaming platform, she earned $99.06.  Keating also made $0.0038015 per stream on Spotify.  After 1,154,513 total streams, she received $4,388.93.  Surprisingly enough, Amazon Music (most likely Music Unlimited) paid out much lower than Spotify and Prime Music.  At $0.0037711 per stream, Keating netted just $167.31 from 44,366 plays.

Using CD Baby as her music distributor, Zoe Keating received significantly lower rates.

At $0.018873 and $0.0118831, Amazon Premium and Tidal had the highest per-stream rates, respectively.  Napster’s service, labeled here Rhapsody, also had a notably higher payout rate.  At $0.0090479 per stream, Keating scored $50.65 for just 5,598 plays.  Apple Music had a decent per-play rate of $0.0078276.  After 29 streams, she earned 23 cents.  Interestingly, Zoe Keating had a higher per-stream pay on Apple Music through her record label.  At $0.0098949, she earned $6,214 after 628,000 plays.

Along with YouTube, Spotify and Amazon Prime ranked as the services with the lowest per-stream rates once again.  At $0.0039 per stream, she earned $5,654.58 after 1,449,887 plays on Spotify.  Amazon Prime’s per-play rate plummeted to just $0.0034152.   After 140,943 plays, she received just $479.81, much less than what she had earned through RouteNote.   YouTube paid her $2.47 for 865 plays at an unsurprising $0.028497 per-stream rate.  Relatively unknown internet radio service 8Tracks came in dead last with a per-stream rate of $0.0004045.  Keating earned $0.82 from 2,027 plays on the service.

Despite falling digital download rates, iTunes and Bandcamp downloads, along with Amazon MP3, proved a great source of income for Keating.

Proving the company’s statement of skyrocketing income last year, Bandcamp paid significantly higher per download.  Keating earned $5,849.76 from just 879 downloads.  From 7,450 downloads on iTunes, she scored $14,600.  For 258 MP3 downloads on Amazon, she received $656.96.

Under performing rights income, Keating earned $36,929 from ASCAP.   She also netted $3,557 from Pandora via SoundExchange.  For advertising share via YouTube CMS, Keating scored $1,504.

You can check out the full report here.

Featured image by It’s The Roop (YouTube screengrab)

Truly gritting entertainment.

Artist manager Arthur Penhallow Jr., formerly of Punch Enterprises and C3 Management, has founded True Grit Management.  Based in Austin, Texas, Penhallow has also acquired booking agency CTK Entertainment, now rebranded True Grit Talent Agency.  Penhallow Jr. has previously worked with Kid Rock and Bob Seger.

[True Grit Management]

Slam your way into the industry.

Founded by a group of producers and DJs, Slam Academy has announced its Music Industry Program.  Scott LeGere, former head of McNally Smith’s former Music Business Department, will teach the program.  It will introduce students to marketing and promotion, covering concepts from copyright to emerging revenue sources.

[Slam Academy]

Tokens with a POP.

POP Network, a blockchain-based peer-to-peer video sharing platform, has announced its Partnership Program.  With the Partnership Program, it hopes to encourage content creators to join the POP Network as early participants.  It will feature selected content on the platform in its launch this summer.  Creators can earn compensation and tokens organically through sharing content on the platform.

[POP Network]

Alexa, give me my TuneIn.

TuneIn has announced TuneIn Live, a new live audio subscription experience for Alexa.  With TuneIn Live, Alexa customers in the US can use voice commands to subscribe and listen to premium content from TuneIn.  They can access live MLB, NFL, NBA and NHL games, premium news, talk shows, and more.

[PR News Wire]

This Baby can now pre-save.

CD Baby’s Show.co has announced its new Spotify Pre-Save Campaigns feature.  Free to all CD Baby artists, it automatically rolls over newly released albums to save upon its release.  According to the press release, it’s similar to the beloved iTunes pre-sale links, but for a new streaming reality.

[Rock Paper Scissors]

Pandora: Now more like Spotify.

Chris Phillips, Pandora’s Chief Product Officer, has announced Personalized Soundtracks.  Similar to Spotify’s custom playlists, Pandora’s personalized soundtracks will use its Music Genome technology to create playlists based on what you listen to.  It remains in the testing phase.   Once launched, you’ll find this feature in the app inside the ‘Browse’ tab of the ‘Featured Playlists’ section.

[Pandora]

Welcome back, ‘Music Exclusives.’  Thanks for bringing video into the mix.

Apple Music has announced that it will officially introduce an extensive catalog of exclusive music videos to its platform.  In addition, it will regularly debut new, exclusive music videos.

[Music Business Worldwide]

Schedule your releases.

SoundCloud has announced Scheduled Releases.  Offering artists more control and convenience, this feature enables them to set a specific time and date for release.  It’s available only for SoundCloud Pro Unlimited creators.

[SoundCloud]

Feel the future in North Carolina.

Moogfest, an annual four-day futuristic music, art, and tech conference, has announced its second wave of artists and keynotes.  Kelala, KRS-One, Mouse On Mars, Jon Hopkins, Little Boots, Shabazz Palaces, and Waajed are scheduled for the festival.  Moogfest will take place in Durham, North Carolina this May 17th-20th.

[Billboard]

Enjoying Indie Week.

A2IM has announced its keynote speakers for A2IM Indie Week.  Tamara Hrivnak, Facebook’s Head of Music Business Development and Partnerships, and Kevin Liles, CEO of 300 Entertainment, will speak at the event.  This year’s Indie Week will take place June 18th – 21st.

[A2IM]

Featured image by Soundcloud

Is it now too late for Pandora Radio to turn things around?

850,000 users gone each month.  8 million active listeners have left the platform in nine months.  $1 billion lost in four years.  Advertising failing to bring any kind of meaningful revenue.  Four major financial firms have downgraded the stock.  Major competitors have reported rising subscription numbers.

Could anything get worse for Pandora Radio?

Yes.  Yes, it can.

Currently, Pandora Radio’s stock price stands at $4.53.  It reached an all-time low of $4.49 several days ago.  Things have gotten so bad that CEO Roger Lynch admitted during a recent earnings call,

“There’s no silver bullet that’s going to come in and solve these problems.”

Investors didn’t want to hear that.

The company’s stock has proven so toxic that CNBC’s Jim Cramer proclaimed,

“Sell, sell, sell, sell, sell, sell.  No, you don’t want to touch that thing.  No.  Terrible quarter.”

But, where did things go wrong for the company?  And can the company finally turn things around?

Probably not.

Failing to take heed of its tumultuous past.

For years, former Pandora Radio CEO and founder Tim Westergren proudly hailed his platform as “the king of streaming.”  Without explaining how, he told investors that the company would finally make a profit this year.  After careful analysis, Digital Music News laid out Westergren’s intricate business plan earlier this year.

“Step 1:  Get subscribers.

Step 2:  ?

Step 3:  Profit!”

Westergren and his team had long believed the company to be a prized possession among streaming platforms.  They repeatedly turned down requests to sell the company at $15 per share.  Realistically, the company’s stock hadn’t reached $20 in years.  It likely won’t ever reach that price again.

Westergren’s reign ended with a sudden resignation.  Yet, Pandora Radio executives remained the course.  Despite seemingly copying features from its competitors, users still failed to sign-up for a Pandora Premium subscription.  Despite this, the company continued to push user-created playlists as the staple of their platform.

Then-interim CEO Naveen Chopra said,

“We don’t need to go into hand-to-hand combat with all of those players as though we were entirely dependent on the subscription business.  We believe that the primary listening experience is passive, for most people, meaning 90 percent of the time you just want to listen to music you like.  It’s not about picking songs you like and building playlists.”

As DMN noted, old-style radio listening has all but disappeared on major streaming platforms.  Listeners on the major streaming platforms don’t truly “pick songs they like and build playlists.”  Spotify and Apple Music employees pick out songs and make them into playlists for users.  That model has proven successful.  Yet, Pandora continues to insist on its old, unproven model.  It also remains optimistic that it will finally gain some much-needed revenue from advertisers.  But, the company won’t provide any specifics.

So, how’s Pandora’s current strategy working out?  Let’s read the following headlines making the rounds.

“Teens are turning their backs on Pandora at a staggering rate, and it should worry investors.”

“Disappointing Ad Trends Highlight Longer-Than-Expected Turnaround Story For Pandora.”

“Macquarie Group Ltd. Cuts Holdings in Pandora Media, Inc.”

Don’t just take their word for it.  Just read through Roger Lynch’s statement during a recent earnings call.

“Our user base has declined in recent quarters;  our ad revenue has not grown as much as we would have liked;  and, as a result, our shareholders returns have been poor.”

So, what’s his plan to turn things around?  Just as Westergren did to run the company into historic lows, Lynch will stick with the current plan.

“We are the largest streaming audio service in the United States both for listeners and for advertisers.  From a listener perspective, with 73.7 million active users, we touch more Americans than any other streaming music service.  And from an advertiser perspective, we represent roughly two-thirds of all digital audio inventory making us the largest publisher of digital audio advertising in the U.S.”

Instead of providing a truly unique streaming platform to finally compete against Spotify, Amazon, and Apple Music, users will basically get more of the same.  In short, Pandora Radio has failed, and will continue failing, to change their course and present a tangible business plan.

What does this ultimately mean for the company?  Well, that we’ll see more of the following painful headlines until the company officially closes its doors.

“Many listeners tune out Pandora;  investors give it a pummeling.”

“Cramer’s lightning round: You don’t want to touch Pandora’s stock after a ‘terrible quarter’”

“Will Sirius XM Put Pandora Out of Its Misery?”

Featured image by Don LaVange (CC by 2.0)

Maybe this is all Spotify’s fault.  Maybe Pandora only has itself to blame.  Either way, Pandora is now battling a tailspin in valuation as Sirius vultures overhead.  Here’s the latest.

Falling subscribers.  Sagging subscriptions.  A surging Spotify.  Welcome to the daily nightmare endured by Pandora, once the darling of music streaming.

Now, the company is battling to stay afloat as Wall Street hammers it southward.

On Thursday, Pandora’s stock assumed a tailspin as an expected buyer failed to materialize.  What buyer?  Early last month, Pandora inked a complicated $150 million loan agreement with KKR Holdings pending an acquisition within 30 days.  That day has now arrived, without the expected suitor.

The cash injection has plenty of unsavory strings attached, but offers a lifeline.  And with annual losses topping $334 million, it’s never been more expensive to keep the lights on.  Hence Pandora’s arrangement to take the cash, if it couldn’t get anything else.

Unfortunately, that ‘better deal’ has yet to materialize.

Now, the company is scrambling to buy some breathing room and extend KKR’s window.  And Sirius XM, whose offer was rebuffed before, may be looking for a bottom-of-the-barrel bargain.  Actually, the online radio streamer has only referred to a ‘strategic investor’ in the wings, though many have tied that to Sirius.

Specifically, Pandora noted that the extension would allow the company to “explore interest expressed by a strategic investor in making a substantial minority investment.”

Fun times!

Separately, Pandora launched its ‘Autoplay’ feature today.

Basically, ‘Autoplay’ shuttles premium users into a recommended playlist after a playlist ends.  Sounds cool, and somewhat similar to a recommendation feature offered by Spotify.  Which is exactly the problem: Pandora’s premium tier is good but late, and not properly differentiated to make a dent against Spotify or Apple Music.

At present, we’re not sure what Pandora’s premium subscriber numbers are.  But the company has pointed to some encouraging early stats.  For starters, premium trials are largely from those under 35, suggesting a coveted Millennial grab.  But trial users also seem to be enjoying recommended playlists, with 97 percent checking out a playlist created for them.

Meanwhile, the stats remain impressive on both Amazon Alexa and Sonos.  According to CEO Tim Westergren, the company accounts for roughly 40 percent of all Alexa listening and 50 percent of Sonos listening.

Whether any of that addresses sagging subscribers number is a difficult guess.  At present, active users are at a two-year low, with at least one accusation of outright reporting fraud.

More as this develops!  Stay tuned.

So, had Pandora Radio agreed to the original SiriusXM deal, they would’ve received $15 per share.  Now, they may get much, much less per share.

In an interview with CNBC Squawk Alley, Pandora Radio CEO Tim Westergren shared the magical way his company would finally make a profit.

Step 1: Get subscribers.

Step 2: ?

Step 3: Profit!

The cold reality of Pandora Radio’s financial state has yet to sink into Westergren and company executives.  The company has lost nearly $1 billion in slightly over two years.  Paid subscriptions account for less than 10% of total users on the service.  Despite being available in three countries, the service only counts 81 million active users.

It has also yet to turn a profit after seventeen years on the market.

Highlighting Pandora’s desperate situation, the company mulled selling its Ticketfly business several days ago.  Westergren, along with company executives, had acquired Ticketfly less than two years ago for $335 million.  Pandora didn’t confirm the news.

Late last year, the company was in acquisitions talks with SiriusXM.  However, the talks soon failed after Westergren and co. refused the offer.  Westergren and his team originally wanted an acquisition price of $20 per share.  This led SiriusXM CEO Greg Maffei to publicly denounce the price as “overvalued” and walk away from talks.  Realistically, Pandora shares haven’t reached $20 since late 2015.

Now, due to Pandora’s dismal position in the market, talks appear to have resumed.  Company insiders spoke anonymously with the New York Post.  Both companies have discussed the purchase price.  One “optimistic” industry insider claims that SiriusXM could purchase Pandora at $12 to $13 a share. Other insiders, however, quickly shot down that estimation.

Westergren’s initial refusal cost the streaming service millions of much-needed dollars.  SiriusXM originally wanted to purchase the company at $15 per share.  In the past, Maffei had valued Pandora at $10 per share.  Westergren’s refusal may have pushed the current buyout price way down. As of writing, the company’s stock stands at $9.23 a share.

Should talks between both companies fall through once again, Pandora may soon run out of money.  Despite Westergren’s claims to run a profitable streaming service, it hasn’t stopped bleeding money. Executives have yet to figure out how to reverse the company’s fortunes.

Underscoring Pandora’s poor position, Goldman Sachs recently released a statement.  Removing the stock from their “conviction list,” Goldman Sachs admitted, “Clearly, we were wrong.” The investment firm remains confident Pandora can turn things around in 2017.  However, the question that Westergren and his team have yet to answer is: how will it do so?

Image by TechCrunch (CC by 2.0)

My Music Thing (CC by 2.0)

Will high paid subscriptions help the “king of streaming” finally become a streaming contender?

This year, Pandora hasn’t had a lot of good news. Despite still reigning as the “king of streaming,” young people are fleeing the streamer in favor of Spotify.  Yet, CEO Tim Westergren remains confident that its paid subscription offers a “real premium product.”

With Pandora Premium, the company hopes to turns things around.  Now, in much-needed good news for the streamer, a top analyst says Pandora will net double-digit paid subscriptions in less than two years.

Currently, Pandora’s stock sits at $11.78, slightly higher than today’s $11.62 opening.  In early January, and again in late January, two analysts downgraded the stock.

Not Piper Jaffray analyst Stan Meyers, though.

In a new report, he reiterated Pandora’s Overweight rating.  According to Meyers, surveys suggest to a solid demand for the streamer’s ‘Premium’ service.  The same surveys also show the streamer’s ‘Plus’ service losing steam.

Meyers still sees Liberty Media’s SiriusXM has a potential buyer for the service. He explained,

“Pandora shares remain under pressure as Liberty and SiriusXM continue to flip-flop in their public stance on takeover prospects. While we continue to believe that Liberty/SiriusXM remains a potential buyer, the price will likely depend on the success of Pandora’s new Premium and Plus offerings.”

Noting the company’s public pressure, Meyers conducted another survey.

“To that end, we conducted a second survey of Pandora users, to reassess consumer demand for the products amid recent competitive actions by Amazon and Spotify.”

As of the fourth quarter of 2016, Pandora had 81 million active users. Out of that number, only 4.39 million are paid subscribers. Piper Jaffray’s second survey focused on the intent of current Pandora users to subscribe to ‘Plus,’ the company’s $5 per month plan.  It also checked the intent of users to upgrade to the $10 per month ‘Premium’ service.

Piper Jaffray found that the current demand for ‘Premium’ remains “largely unchanged at 15%.”  At the end of 2018, paid subscription numbers would rise 12.15 million to 16.54 total paid subscriptions.

However, interest for ‘Plus’ has fallen.  Previously, users expressed a 28% interest.  This would’ve meant 22.68 million more paid subscriptions from its current user base.  However, the number has since decreased by half to 14%, or 11.34 million paid ‘Plus’ subscriptions.

In total, Meyers calculates that the company would have 32.27 million paid subscriptions.

Meyers ended his report stating,

“The survey continues to illustrates meaningful pent-up demand for Pandora’s new offerings, supporting our positive outlook on the shares.”

Pandora CEO Tim Westergren (center) appears at SF Musictech Summit.  Corey Denis (CC by 2.0)

In a new interview with CNBC, Pandora CEO Tim Westergren shared how the company will make a profit.

Step 1: Get subscribers.

Step 2: ?

Step 3: Profit!

In 2015, Pandora reported a heavy loss of $170 million.  Last year, that number more than doubled.  The streamer lost $343 million.  In total, the company lost $513 million in two years.

SiriusXM walked away from acquisition talks, calling the company’s stock “overvalued.”  Earlier this year, Pandora cut 7% of its workforce.  Yet, according to CEO Tim Westergren, 2017 will be the year the company posts a profit.

On CNBC’s Squawk Alley, Tim Westergren said, “We intend to be profitable this year.”

However, he avoided answering questions about whether the company was for sale.  Instead, he told Squawk Alley that the company has faced viability standing questions before.  The company, according to Westergren, beat out radio offerings from top tech giants, and still continues unchallenged.

“We’ve seen this movie before, 10, 11 years ago when we launched internet radio.  A lot of folks said the same thing – AOL, Microsoft, Yahoo had large personalized radio products with big distribution.   But we built a much better product, and here we are years later the king of that category.  We just think we’ve seen this before.”

Going further, rival streaming services aren’t worrying Westergren.  Taking a swipe at competitors, he claims that Amazon and Apple have yet to offer a true premium product.  In fact, he boasted that Pandora Premium offers listeners what they really need.

“I am confident about our ability in this space.  These are early days in the subscription of music.  And listeners don’t know what a real premium product looks like yet, and that’s what Pandora is.”

Pandora launched its premium service on Monday.  However, taking a closer look, the company’s premium features appear awfully similar to its competitors.  Apple Music and Spotify both offer “smart playlists”.  Its touted ‘My Thumbs Up’ feature matches Spotify’s Discover Weekly and Daily Mixes (even though Pandora practically invented the idea).

Pandora Premium also costs $9.99 a month, on par with the competition.  In addition, a new survey shows that despite being the “king” of streaming, its position is quickly eroding.  In the past 3 years, people aged 12 to 54 have switched to rivals like Spotify and iHeartRadio.

So, what makes Westergren and crew confident in their ability to make a profit?  The company has a “unique advantage” in understanding what users like.  That turns the service into “a friend you have known for a while”.  Over 112 million have created at least four stations, claims Westergren.  He explained that for the company,

“There’s no cold start problem.”

When you enter a song, you don’t have to have “to hunt and peck your way to a playlist,” said Westergren.  Instead, with Pandora, you will find a whole host of songs uniquely picked for the users (again, like Spotify.)

Westergren dismissed speculation about a SiriusXM acquisition as merely the “joys of being a public company”.  The company will instead focus on the product, artist partnerships, advertisers, and shareholders.

But, will the company take on private equity financing?  Probably, but Westergren said that the company would do so “from a position of strength”.  Top smartphone launches, including the new Samsung phone, the iPhone, and Amazon Echo’s success will ultimately benefit the company’s business.

“We love new products that come out for distribution.  We are the most used app on pretty much every one of these devices.”

However, in the interview, Westergren didn’t lay out a clear financial game plan for the company.  Pandora has remained in the internet radio market for 17 years now.  It has yet to unlock the secret to turn large subscriber numbers into profit, however.

Pandora CEO (and co-founder) Tim Westergren (l); interviewed by SF MusicTech Summit’s Brian Zisk (r) (Corey Denis (CC by 2.0))

Pandora still tops the list of music streaming services.  But will fading numbers spell longer-term problems at the company?

After teasing users for months, Pandora has finally launched its premium service.  But the move is coming against a troubled backdrop.  The company recently posted bleak financial reports, and SiriusXM pulled out of advanced buyout talks after deeming the price too high.

The company remains unable to convert its roughly 80 million users into a profitable revenue stream.  According to their financial reports, Pandora has lost an astounding $512 million in the past two years.

Now, a new survey underscores the streamer’s weakening position in the streaming market.

Between January and February of this year, Edison Research conducted a national telephone survey.  They interviewed 2,000 people aged 12 and older using random digit dialing techniques.  Per the results — and in good news for the company — Pandora remains the most popular streaming service by a wide margin.

Overall usage.

In total, 32% of people listened to the service in the last month.  Spotify took second place with 18%, and iHeartRadio came in third with 13%.

(Tidal didn’t rank at all in the survey).

Edison Research

Brand Awareness.

Pandora also has the strongest audio brand awareness with a whopping 86%.  iHeartRadio came in second with 71%, and Spotify third with 62%.

Edison Research

Yet, digging deeper, the survey shows strong red flags for the financial health of the company in the long-run.  Among the next generation of consumers, aged 12 to 24, only 30% listened to the streaming service in the past week (at the time of the survey). This represents a 3% drop from 2016, and a severe 15% dive from just two years ago.

Spotify may have picked up these listeners.  In 2015, only 17% of listeners in this age group listened to the Swedish streamer.  The number jumped 8% last year, and grew more than double the original amount this year.

iHeartRadio and Apple Music saw minimal growth in the past three years.

Edison Research

But what about the current generation of consumers during the same time period?  While not as dramatic as listeners aged 12 to 24, Pandora still suffered a noticeable drop.  Among people aged 25 to 54, the service still came in as the most listened to service with 29%.  While undeniably strong, this number shows a 3% decline over last year, and a 4% decline from 2015.

Meanwhile, Spotify keeps gaining as the company reached 14%, double 2015’s numbers.  iHeartRadio and Apple Music didn’t fare well in this age group.  Both companies saw dramatic 6% decline in surveyed listeners for the past week.

Edison Research

Among the 25-54 age group for the past month, Pandora’s numbers stagnated.  The popular streamer maintained its position at 39%, tying last year’s numbers.

Yet, Spotify slowly keeps creeping up on the streaming leader.

Edison Research

Broader Look.

The overall numbers show warning signs for the company’s health in the long-term.  As the company rolls out its premium service, Pandora has yet to unlock the secret to attracting and keeping new listeners.

But do the numbers indicate a bleak future for the company?  In the survey, more and more users appear to be abandoning the service in favor of Spotify.  When asked about the most used audio brand, Pandora stood strong in first place with 40%.  Yet, these numbers show an 8% decline over last year, and a strong 14% drop from 2015.

In turn, only 10% of surveyed users reported using Spotify in 2015.  Yet, the number saw a 4% increase in 2016, and a whopping 11% over 2015.

Edison Research

Edison Research’s survey goes on to show interesting information about podcasts and music usage in general.  You can read the entire survey here.

Image by Rob Albright (CC by 2.0)

An Alexa-enabled only device music subscription may help Amazon Music Unlimited route the competition in 2017. Yet, a new study shows dipping numbers for Spotify ahead of their IPO, and Echo users aren’t buying Music Unlimited.

Right after the holiday season, Amazon reported booming sales for Alexa-enabled devices, including the Dot and Tap. In fact, according to MusicWatch’s 15th Annual Music Survey, 14 million US consumers reported using an Echo device. Amazon also launched their Music Unlimited service late last year. However, the company has yet to report official paid subscription numbers. So, how well is the e-commerce giant’s paid subscription service faring?

Yet, only 13 percent of Echo users actually listened to Amazon Music Unlimited last year. MusicWatch’s data include paid subscriptions, trials, and account sharing. Whereas Music Unlimited only saw a 13% share, Pandora took home the grand prize. The streaming service ranked as the most-listened to streamer among Echo users with a 43% share. The numbers fall in line with a previous MusicWatch study, showing that American consumers favored Pandora over streaming video giant YouTube. iHeartRadio came in second with a 36% share, and Amazon Prime Music in third with 22%.

Amazon’s streaming service, rated here as one of the best, offers discount pricing for Echo-only and Tap-only users. However, Amazon may simply dismiss the low adoption rate as the service launched during the latter half of 2016.

However, Spotify continues to show worrying numbers. Ahead of their rumored IPO, the service only reached a 7% share of total music listening. Among Echo users, the service slightly beat out Music Unlimited. TuneIn barely edged out the e-commerce giant’s offering at just 14%. Yet, in MusicWatch’s July Monitor study, TuneIn ranked the worst in class in brand awareness among free services.

The MusicWatch Annual Music Study is based on 5,200 respondents aged 13 and older. Respondents answered questions between December 17, 2016 and January 2, 2017.

Image by Pandora

If Pandora is doing so well, why are many insiders selling their shares and no one purchasing? Will SiriusXM purchase Pandora? Will anybody?

We’re in the early morning trading hour session. Pandora stocks aren’t doing so well. As of writing, the price is 18 cents below its opening. Earlier today, the stock reached $14.01 per share amidst acquisition rumors.

It’s no secret that Pandora wanted to compete in the music streaming arena. At an exquisite yet extravagant event in New York Tuesday, Pandora finally revealed their full-fledged Spotify competitor. Dubbed Pandora Premium, the service gives users on-demand access to a sizeable music catalog. The service is designed to take on competitors like Apple Music, Spotify, and even Amazon Music Unlimited. The company wrote on their blog,

“It is a completely reimagined music service that redefines what ‘premium’ could and should be.”

What makes Pandora Premium so unique? The service will leverage their smart playlists, allowing users to automatically add similar songs. The company wrote,

“The upcoming features tune into each listener’s individuality and leverage our deep knowledge of musical data; it will be an effortless and flexible experience for all subscribers.”

The announcement comes a week after a heavily-shared CNBC report. Sources close to the company told CNBC that Pandora is open to selling itself. SiriusXM is expected to pursue a deal. This news sent the stock surging last Friday. Shares jumped 16%. However, SiriusXM Holdings fell more than 5%. Last summer, Pandora’s board rejected a $15-a-share offer from Liberty CEO Greg Maffei.

Reuters all but refuted CNBC’s report. An insider told the news agency that the company isn’t making any effort to sell itself. Instead, it will focus on “executing its strategy and its operating model.” This includes the shift to Pandora Premium. Competitor Spotify wants to purchase SoundCloud in order to strengthen its position, according to a September report.

At the same time, Pandora is looking beyond SiriusXM. Sources told CNBC that the company is looking at other potential buyers. This move will give the internet radio company leverage in negotiations with SiriusXM.

Yet, company insiders are currently selling their stock. The Cerbat Gem reports that top company insider, Christopher Douglas Martin, once again sold another 2,000 shares. This marks the fourth time in just 3 months. The article shows Martin’s reports,

• On Wednesday, November 16th, Christopher Douglas Martin sold 2,000 shares of Pandora Media stock. The stock was sold at an average price of $10.83, for a total value of $21,660.00.
• On Tuesday, November 1st, Christopher Douglas Martin sold 2,000 shares of Pandora Media stock. The stock was sold at an average price of $11.31, for a total value of $22,620.00.
• On Friday, September 16th, Christopher Douglas Martin sold 2,000 shares of Pandora Media stock. The stock was sold at an average price of $13.37, for a total value of $26,740.00.

The internet radio giant announced their quarterly earnings results on October 25. They missed analyst consensus estimates. The company has not seen strong insider buying since their 1Q 2016 reports. Insiders purchased around $6.15 million in shares. Before that, the company saw insiders sell over $10 million in shares, financially weakening the company.

Image by The Cerbat Gem

Canaccord analyst Michael Graham views the internet radio’s new Premium service as a good sign for the company. Graham expects strong subscriber conversion over the next few quarters. He currently has a $18 price target and a Buy rating for the stock. Yet, according to the Independent Republic, Graham is among 9 analysts that consider the stock a buy. However, 13 equity research firms advocate a Hold. At least no single equity firm nor analysts consider the stock to be a sell. 25 analysts consider the stock will reach a maximum of $14 per share.

One optimistic analyst believes the stock may jump 40%, to $22. However, the internet radio giant hasn’t shaken pressure to sell itself. Back in May, activist investor Keith Meister, who runs hedge fund Corvex Management, wrote to Pandora

“We have become increasingly concerned that the company may be pursuing a costly and uncertain business plan, without a thorough evaluation of all shareholder value-maximizing alternatives. Despite its many strengths, the company has been unable to date to translate its great product into a great business with an attractive public market valuation.”

Pandora accounts for a massive 27% of music streaming time in the US.  Apple Music accounts for 2%.  Pandora is launching a new streaming service to more directly compete with Apple Music.  Any questions?

After launching their brand new Pandora Plus plan (replacing Pandora One), MusicWatch research has noted that Pandora is the leading share of weekly music streaming hours here in the States for the second quarter of 2016.   That simply dwarfs Apple Music: almost one-third, or nearly 30 percent of consumers, have spent time streaming music on Pandora, followed immediately by YouTube with 27 percent and Spotify at just around 18 percent.

For those who pay for “on-demand” music subscriptions, Spotify Premium took the lead, posting a 7 percent share, followed by only 2 percent for Apple Music.

Here’s an infograph breakdown provided by MusicWatch to DMN this morning (we’re awaiting a higher-res version):

Strangely, Apple Music seems to be getting 27% of the attention in the media, while Pandora is getting 2%.  And, you can partly blame publications like Digital Music News for that.  But the real story among American music listeners is a bit different, with Pandora entering the on-demand streaming space with some serious leverage.

Russ Crupnick, Managing partner of MusicWatch, pointed out that if Pandora can upsell people, Apple might be toast.  “Pandora’s strength in the market represents a major opportunity to migrate listeners to new tiers of services, including on-demand and revised lower-price offerings,” Crupnick told DMN.

Spotify is also dominating, but of course, Apple Music is on a serious incline.  For now: “At the same time Spotify is leading growth in the on-demand segment.  Although Spotify Premium has a lead over Apple Music it is important to keep in mind that Spotify had quite a head start, and many Apple users are still in the trial phase.”

MusicWatch used their Audiocensus tool, which is a monthly tracking study of net users here in the States aged 13 and above. The share of listening hours is based on the size of the audience for each service and the amount of time all users spent listening to said service in a standard week.

There’s no word yet on how Pandora’s new paid tier will affect upcoming results, but we’ll make sure to keep you updated on the news once we have it. Pandora has also confirmed that they’re working on their $9.99 tier to better compete with Apple Music and Spotify Premium.

Pandora image by bnpositive, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0)

$4.99. Are you out of your mind?

Digital Music News has reported before on Pandora’s $5 plan, but today, it became official: Pandora has just launched their new Pandora Plus plan at $4.99. It replaces their current Pandora One plan at the same price.

Just like Pandora One, you’ll be able to enjoy your favorite music on Pandora without having to listen to ads and much higher-quality streams. Current users won’t have to worry about seeing a change in their monthly statements, other than just a new name.

Is there anything new? Yes, of course, thanks for asking. You’ll be able to listen to your music without having to be connected to the internet. You’ll also get unlimited skips and replays with your new Pandora Plus plan. The offline plan will be better known as “predictive offline mode,” which will detect when your connection goes down. What exactly does predictive offline mode do? Pandora will restore your thumbprint radio station along with the last 3 radio stations you’ve listened to. Pandora Plus users will be alerted by an audio message when their connection drops.

Free users don’t have to worry about being left behind by Pandora’s new offering. They’ll be offered to skip songs and replay their favorites by viewing video ads. Pandora One users will be slowly migrated over to Pandora Plus over the next few months.

Pandora is still planning to release their $10 a month service later on this year to compete directly with Apple Music, Tidal, and Spotify. In a statement, current Pandora CEO Tim Westergren said,

“Whether a listener wants to take advantage of our enhanced ad-supported experience, our ground-breaking subscription radio service, or our fully interactive on-demand option coming later this year, we have a solution tailored for you at a price point you can afford.”

With a lower price offering than other competitors, one concern both users and musicians have is, “How exactly will Pandora be able to turn a profit and pay out musicians fairly?” Digital Music News reader Ben Thinkin’ posted a question yesterday that rings even more true after Pandora’s latest announcement:

“With the current streaming leaders charging $10 per month, the money has yet to trickle down to the artists. Pooling revenues means the price per stream is going down and down.

So surely cutting that revenue in half will solve this problem correct? I wonder why nobody thought of this before? What am I missing here?”

So much for timed exclusives…

Frank Ocean’s much-hyped second album, which was supposed to be an Apple Music exclusive for at least two weeks, is now available to be streamed on Pandora, whether you’re a premium user or happen to have a free account.  Sounds like a good deal, right?  You don’t have to sign-up for any Apple Music free trial subscription, nor do you have to pay afterwards, and you can listen to the album all you want.

But there’s a catch.

Blonde is on Frank Ocean’s Pandora channel, which means you can’t listen to the album the way you want.  Also, since it is on the channel, you’ll have to listen to other artists as well, with CNET’s Joan E. Solsman reportedly only listening to 3 Blonde songs, 2 by “Drake, and the rest were by a potpourri of artists like J. Cole, Chris Brown and The Weeknd,” with the next 10 songs not being off of the ‘Blonde’ album.

There are a few theories circulating on the internet as to why Frank Ocean may have released both Blonde and his visual album Endless at around the same time.  According to Complex.com, it may have been to get out of his contract with Def Jam and UMG. This may also explain why UMG has been rather slow to squash out any online links to Ocean’s album, from a host of torrents to Dropbox links, and even the full album on YouTube being made available.

This news, along with several other links to the full copy of Blonde widely made available online over the weekend, reportedly has Universal Music Group fuming.  Lucian Grange, labeled by The Guardian as “the most powerful executive in the music industry,” reportedly sent out a company-wide memo to stop the practice of making exclusive distribution deals with streaming services.

Blonde is expected to reach number 1 on the Billboard 200 chart. So far, Frank Ocean nor UMG have commented on this news.

Today, Pandora announced a partnership with Music Reports, promising 100% reporting transparency…

Music Reports will manage the mechanical licensing and royalty administration for Pandora’s upcoming streaming service.  With this, Pandora is hoping that this new level of openness for publishers and music makers will set them apart from its competitors.

The move closely follows the reinstallation of Pandora founder Tim Westergren as CEO following an earlier shake-up.  The major move, triggered within ten days of his announced return, signals a big commitment back towards royalty accounting and transparency.  ‘‘As we expand the listening experience on Pandora, it’s important that we continue to ensure music makers are not only accurately and fairly compensated, but also have more control and greater transparency around the use of their art,” Westergren stated.  “That’s why Music Reports opt-in licensing and full reporting infrastructure is so important.’’

The move will hopefully expand licensing to a greater number of publishers, simply because they’ll know who to contact (more on that later).  “Pandora and Music Reports share a commitment to comprehensive licensing solutions so that royalties properly flow to publishers and songwriters,” noted Bill Colitre, Vice President and General Counsel of Music Reports.  “Music Reports is in a unique position to reach every active publisher in the market, ensuring Pandora can offer them all the opportunity to participate in these new services, on the same terms.  This is another huge step forward for music licensing in the United States.”

Pandora has become one of the most established streaming services, though it hasn’t quite got the reach or following of other streaming platforms like Spotify, Apple Music, or Soundcloud.  That’s most likely due to the fact that it’s not on-demand.  But, what Pandora does have is a major focus on artists; indeed, this is a company that prides itself on empowering artists with valuable data and tools to help grow their careers and connect with their fans.

Meanwhile, the smoke is still clearing in the executive suite: there’s been the exit of CEO Brian McAndrews, the reinstating of the founder and CEO Westergren, and a larger executive shake-up sprinkled on top of a mini rebellion by investors.  The company is also struggling through disappointing financial results, speculation of a possible sale, and the expensive expansion with the recent inclusion of Ticketfly (cost $450 million) and the purchase of assets in Rdio ($75 million and counting).

Perhaps royalty payouts and accounting, including somewhat bloated payouts via SoundExchange on the recording side, could be the next major focus.

Image: geralt@pixabay (public domain).

Pandora’s share price has seen a massive increase amidst speculation of a possible sale.

DMN previously reported a major slump in the share price after the departure of former CEO Brian McAndrews in March. McAndrews departure saw the reinstating of former CEO and co-founder Tim Westergren. But, now that there is talk of a sale looming the share price has perked up significantly, with a 32 percent spike over the past three weeks.

So, what’s been going on?

Well, there have been talks for some time that Pandora may go for sale. According to the rumours, Pandora have been working with Morgan Stanley to meet with potential buyers. Though, the talks were preliminary and may not result in a deal, according to the New York Times, a sale could nestle the company into a broader, more diversified music play.

Since the CEO switch, there have been refreshed reports of potential sales with other bidders like Verizon, SiriusXM amongst a handful of others. At this time, there currently isn’t much weight behind these reports, but it’s not a far-fetched claim considering the company is still heavily reliant upon ads and is not profitable as of yet.

Pandora have bagged themselves an increased share price this past weekend as a result of the sale rumours. It’s hard to tell at this stage if it’s all just one big rumour that’s circulating the music business or whether there are some solid foundation to the claims.

Pandora chief financial officer Mike Herring, speaking at the Wedbush 2015 ‘California Dreamin’ Technology’ Consumer Management Access Conference in Santa Monica, CA, December 10th.

There’s nothing worse for a venue than being half-full.  The artist is unhappy, they have a half-full room. You don’t sell as many beers. You don’t sell as many tickets obviously – like everyone loses.”

“You increase that 20% and it’s a dramatic difference.  And that’s – what Pandora brings to that equation is demand.  What we’ve done this for Adezza, when we did this for Rolling Stones – Rolling Stones have been doing pre-sales of their tours forever and usually about 20% of pre-sale allotments gets sold.  Pandora sold 100% of the allotment, 55,000 tickets in 24 hours, not because of any other reason other than we knew exactly who wanted to buy those tickets.

…

“Ticketfly brings a platform to that equation.  It brings the footprint.  It brings those things together and it brings tremendous value not just to us, of course we want to drive revenue for Pandora and profits for Pandora – we also – it brings tremendous value to the listeners.  They know about concerts when they come and they can attend and see music they love. It brings tremendous value to the artist because people show up to their concerts.  The venues get a sold-out house.  The value chain, the whole value chain raises. That’s what Pandora’s basic philosophy is how do we bring the music industry back. It’s had a tough 15 years.

“I mean Steve Jobs eviscerated the music industry with the launch of iTunes and it’s been downhill ever since.  And the download was supposed to save it, that didn’t happen.”

Now on-demand streaming is supposed to save it.  We will see if that happens.  I think what really needs to happen is we need to think broadly how do we drive engagement overall as a music industry and that message is starting to make sense.

…

All these things matter in the context of lifting the overall industry because we need the industry to be healthy for Pandora to survive. And we want to – we also make money along the way.

Image by Ben Stanfield, licensed under Creative Common Attribution 2.0 Generic (CC by 2.0).  The full, 6-plus page transcript (including the comments related to Steve Jobs) is at Seeking Alpha, here (it’s an amazing site).   

Join the DMN info brigade! Send any tips to news@digitalmusicnews.com, or (310) 928-1498 (complete confidentiality protected).  

SONGS Music Publishing , the sixth biggest publishing company in the US, has struck a direct licensing deal with Pandora.

Pandora describes the multi-year, direct-licensing agreement as ‘creating business benefits.’  Such benefits are likely to give Pandora the ability to launch an more interactive streaming service in 2016, due to recently bought Rdio assets.  The news comes a month after the world’s largest publisher Sony/ATV announced a direct deal with Pandora, and represents a broader initiative to sidestep complicated government royalty rates with direct deals.

Direct-licensing is tricky stuff, and controversial.  But SONGS sees benefits.  “Now is the time to move past the over-regulation of songwriter rights and towards a market-based approach to streaming music,” said Matt Pincus, SONGS founder and CEO.  “I value Pandora‘s commitment to treating all songwriters and publishers equally and look forward to a new chapter with them.”

Brian McAndrews, chief executive officer of Pandora, added, “This agreement with SONGS underscores that commitment and demonstrates our shared belief that all publishers and songwriters should receive equal treatment.  Pandora is a leader in the space and we continue to improve value to music publishers and songwriters – a positive step for the entire industry.”

The public performance royalties Pandora also pays to rights holders of master recordings are not affected by this agreement.

…from a recent op-ed by Pandora CEO Brian McAndrews on Business Insider:

“Internet radio is sampling and discovery; on-demand is the modern equivalent of ownership.  Only that’s where the analogy breaks down. Because today it is far too easy for on-demand consumers to continually “own” music for free.  Not just a free trial, but free all the time.”

“…the value of music will continue to spiral downward.”

“Years ago, if anyone could have walked into a record store, legally taken every record home for free, and listened to the exact songs they wanted for as long as they chose, the music industry model would have completely broken down. But that is exactly the situation the music industry faces today.”

“This gray market is unsustainable. If consumers can legally listen to free on-demand music permanently without converting to paying models, the value of music will continue to spiral downward to the benefit of no one.”

“This problem is imminently fixable: limit free on-demand music to truly trial. Countless other industries successfully convert their consumers from limited-time trials to payments.  Ad-supported radio models will continue to lead to exposure and discovery, on-demand services will convert a sizable subset of those listeners to subscribers, and we can all work together to banish the gray market experiment of recorded music.”

The full interview here.

Image by joiseyshowaa, licensed under Creative Commons Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).

Updated, Dec. 3 2:15 pm PT: Shares of Pandora (P) have now slumped further, dropping 11.49 percent in distressed Thursday trading.

Wall Street is now punishing Pandora again, with shares dropping another 10% amidst growing financial concerns.  On Wednesday, Pandora announced that it would be pursuing $300 million in convertible debt after completely nearly half-a-billion in acquisitions.

The sell-off largely erases Pandora’s fragile recovery in November following a late-October free-fall.  Ahead of Halloween, investors tanked the stock 36% following quarterly losses of nearly $90 million.  Meanwhile, Pandora is choking its listeners with heavy advertising to raise cash, a move that could affect active listener levels.

Pandora, a company incinerating cash at seemingly-impossible levels, is now stretching its finances even further.  According to details first emerging on Wednesday, the billion-burning Pandora is now attempting to secure an additional $300 million in debt while its stock valuation remains guttered.

The convertible debt offering, opened to creditors this week, would allow Pandora to further bankroll a grandiose roadmap that includes an on-demand subscription play and a broad, international expansion.  Already, Pandora has spent more than half-a-billion acquiring companies in the past few months, part of a cash-burning inferno that makes the movie Backdraft look like a soggy cigarette butt.  The searing heat includes a curious $450 million purchase of Ticketfly and a near-$80 million acquisition of bankrupted Rdio, not to mention a $50 million purchase of analytics firm Next Big Sound.

All of that is on top of quarterly losses tipping $90 million, enough to make Wall Street a nervous bear on the stock.  Shares of Pandora (P) remain 22 percent below June levels, a reality that makes the stock exchange a difficult piggybank to smash.  Back in 2011, Pandora rustled $235 million from its IPO, with a secondary offering in 2013 that rallied another $250 million.  But Pandora has remained profitless throughout, with top executives like co-founder Tim Westergren minting tens of million in personal gains and while pursuing lavish ‘investments’.

Meanwhile, the situation around on-demand streaming music remains a soggy and speculative mess.  The freshly-bankrupted Rdio is now on life-support, with Pandora tossing an emergency $2.5 million to keep the patient from flatlining.  Looking ahead, the major labels are undoubtedly preparing for a huge windfall, with Pandora a perfectly-plump target for massively-overpriced recording licenses.

More as the wildfire ensues!

For year so far…

First, Pandora shocked Wall Street with an astounding $86.9 million in quarterly losses, the beginning of a total tailspin in shares.  Then, Pandora announced a $450 million acquisition of Ticketfly, following by a $75 million acquisition of a bankrupt Rdio, followed by a $2.5 million emergency cash injection to keep Rdio alive during its bankruptcy proceeding.

So who’s gonna pay for this?  Listeners, who are now being treated with an avalanche of advertisements sometimes reaching six or seven spots in a row.  Most listeners, however, seem extremely supportive of the ramped-up advertising levels…

Unclear is when Rdio is shutting down, though all subscriptions will be terminated effective November 23rd.  The news follows Rdio’s march into bankruptcy proceedings, with debt loads topping $220 million and per-month losses exceeding $2 million.

Pandora is buying the company for $75 million, pending the results of a potentially protracted bankruptcy proceeding.  In the meantime, Pandora has been forced to pay $2.5 million just to keep the lights on for the next few weeks.

The question is when all of this goes ‘kaboooom!’ 

Pandora (P) shares are down nearly 40% in the last month alone, with Wall Street wondering WTF is going on with a near-$600 million acquisition spree that includes a $450 million ticketing company, a $50 million data analytics firm,  and a $75 million bankrupt streaming music company.  That mega-bill, on top of $90 million in quarterly losses, is making certain investors very, very nervous.

As for the latest purchase, details are now surfacing on a deeply troubled Rdio, a streaming music company that was losing $2 million a month according to bankruptcy filings this week.  Overall, Rdio owes a cool $220 million to various debtors, including Sony Music Entertainment, which is owed $2.4 million.

Other labels, incuding Warner Music Group, Universal Music Group, and indie representative Merlin, are collectively owed more than $1 million.

Meanwhile, the situation on the ground at Rdio is shaky at best.  The company employs roughly 140 people, and Pandora has indicated interest in plucking the brightest minds.  The rest will be chopped, a pall of uncertainty that is undoubtedly killing productivity.

Plucking technologies and bright minds while avoiding debt sounds great on paper, but someone has to keep these lights on.  All of which introduces a potentially perilous quagmire: Pandora has already stepped in with a $2.5 bailout payment while details are sorted out, with another $3 million of debtor-in-possession cash designed to keep things afloat for the next two months.  Pandora initially indicated that its $75 million purchase was predicated on a successful bankruptcy process, one that officially started on Monday.

Back to the plunging stock on Wall Street, a scramble could be materializing towards the exit doors.  TheStreet issued a firm ‘Sell’ rating on Tuesday, with a dreary ‘D+’ rating that loosely translated into ‘Run!’

“We rate PANDORA MEDIA INC (P) a SELL.  This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company’s weaknesses can be seen in multiple areas, such as its deteriorating net income and generally disappointing historical performance in the stock itself.”

Back to Rdio, DMN is already receiving news that various distributors are pulling catalog after not receiving royalty payments.  Already, Leicester, UK-based Horus Music has advised clients of a pullout, perhaps the first of a mass removal while Rdio sifts through its debts.  That means that on top of all of its cash injections, Pandora will then be faced with the daunting task of re-negotiating dozens of contracts with suppliers and labels, many of whom haven’t been paid.

The question is whether Pandora CEO Brian McAndrews is ignoring a giant iceberg ahead.   “Wherever and however fans want to hear music, we intend to be their go-to destination,” McAndrews stated, a big vision with a big, big price tag.

Separately, Investment bank Moelis & Company initially attempted to raise capital for the floundering Rdio, but has now jumped ship.

Pandora is burning an epic pile of cash.  Rdio has already burnt theirs.  Which brings us to the latest music industry acquisition: a $75 million acquisition of a bankrupt streaming music platform by a cash-hemorrhaging streaming radio platform.  Seems like a pretty awesome idea!

In its multi-year tenure, Radio achieved virtually zero traction against Spotify, and plunged into bankruptcy as a result despite $125 million+ in financing.  Now, the woefully-underperforming Rdio is being plucked out of bankruptcy by Pandora for $75 million, with technology and personnel the acquisition ‘assets’.

“I couldn’t be more optimistic about Pandora’s future and the future of music.”

A huge question is where this cash is coming from: after massive royalty charges and a questionable $450 million acquisition of Ticketfly, Wall Street is starting to bum-rush the exits on a potential sinkhole.  Over the past three months alone, shares of Pandora (P) are down more than 32 percent, with overspending and royalty uncertainties curbing the enthusiasm.

Brian McAndrews, Pandora CEO, sees this as part of an aggressive, blue-sky expansion.  “We are defining the next chapter of Pandora’s growth story,” McAndrews stated against the warm, crackling noise of a bonfire in the background. “Adding live music experiences through Ticketfly was a transformative step.  Adding Rdio’s impressive technology and talented people will fast-track new dimensions and enhancements to our service.   I couldn’t be more optimistic about Pandora’s future and the future of music.”

“Pandora is not acquiring the operating business of Rdio, it is acquiring the technology and talent to accelerate its own business strategy.”

The final purchase comes with plenty of strings attached, including a successful Rdio bankruptcy proceeding.   That will allow Pandora to strip out the nasty, money-draining overhead and operational costs that got the company into trouble in the first place.  “The transaction is contingent upon Rdio seeking protection in the United States Bankruptcy Court for the Northern District of California,” a Pandora statement continued.  “Upon approval of the proposed transaction by the bankruptcy court, Rdio will be winding down the Rdio-branded service in all markets.  Pandora is not acquiring the operating business of Rdio, and is acquiring the technology and talent to accelerate its own business strategy.”

Pandora pointed to the launch of its “expanded listening experience” by the end of 2016, which would presumably include an Rdio integration.

From Google’s beta-stage measurement analysis of topics, designed to accurately measure overall interest in a broader topic area, not just one specific search term.

Results are relative to previous interest, but Google doesn’t offer absolute search volumes.

After years of acrimony, Pandora is now ringing the bell on a fresh licensing deal with Sony/ATV, the largest music publisher in the world.

Updated: It has now been clarified that Sony/ATV does indeed have the right to strike a separate performance rights deal with Pandora, but cannot withdraw a license from Pandora while still a member of either ASCAP and/or BMI.  That is the conclusion of US Department of Justice consent decrees on the matter, themselves potentially subject to revision at at later point.  

“We believe that this agreement with Pandora is a major step in the right direction to ensure that our songwriters are fairly compensated for the use of their music on streaming services,” Marty Bandier, Sony/ATV Chairman and CEO, declared in a statement emailed early this morning to Digital Music News.

“This is a significant milestone in our long-standing effort to strengthen ties with the music maker community,” said Brian McAndrews, chief executive officer of Pandora.

The attorneys we spoke to this morning didn’t have any splashy quotes, merely confusion over how this deal could be happening.  As in, legally, how it’s possible given federal court rulings that prohibit direct publisher agreements alongside existing PRO relationships with either ASCAP or BMI.  “Is Sony/ATV now going to license every mom & pop?” one lawyer asked Digital Music News.

Pandora has previously executed direct licensing deals on the recording side, specifically with indie label consortium Merlin and classical label Naxos.  But those were executed within the (relatively) reduced legal entanglements of the recorded music world, which has far fewer governmental regulations than publishing.

Those recording deals and payouts, funneled through SoundExchange, will not be affected according to the companies.  “The public performance royalties Pandora also pays to rights holders of master recordings are not affected by this agreement,” Pandora stated.

Wall Street has been battering Pandora over the past few days, thanks to massive quarterly losses of $85.9 million, a $90 million royalty hit, and a massive competitive threat from Apple Music and Beats 1.  In the past five days alone, Pandora’s shares have dropped 35.25 percent, and a monstrous 54.8 percent since the start of 2014.

Which means that if you had invested $1 million in Pandora stock on January 3rd, 2014 (the first open trading day of that year), you’d now have $451,975 today.
That number gets even worse if you happened to purchase at Pandora’s 2014-high of $37.42, reached on February 28th.  In that scenario, the foolhardy investor would now have $332,977 on an initial, $1 million investment.  And for those thinking of jumping ship in 2015, there’s little consensus among analysts: according to Zacks Research, the most bullish projection sees Pandora rebounding to $28 within the next year, while the lower-end prediction is $10.

What could possibly go wrong?

Pandora shares are down 37 percent in the last week alone, thanks to a recent quarterly loss of $85.9 million.  Spotify is delaying its IPO indefinitely against continued licensing uncertainty.  After just three months, Apple Music now has more paying subscribers than Deezer.

But half of Deezer’s 6.34 million subscribers haven’t even accessed the service once in the past month.

Perhaps catching a whiff of pungent reality, Deezer has now smartly decide to indefinitely postpone its initial public offering (IPO) in Paris, citing ‘market conditions’.  The well-funded Franco-streamer is staying on the sidelines indefinitely, while perhaps focusing on its core proposition and/or waiting for ‘conditions’ to improve.

Deezer, which is now present across 180 countries excluding the US, has roughly $150 million in funding.  Access Industries, headed by Russian billionaire Len Blavatnik, is by far the biggest backer.

The sell-off follows an abysmal financial disclosure on Thursday by Pandora CEO Brian McAndrews, one that includes losses of $85.9 million in the past three months alone.  It also follows an extremely questionable $450 million acquisition of Ticketfly, not to mention a $90 million royalty hit for pre-1972 oldies recordings.

The oldies decision left a $57.9 million crater in the recent quarter, though cash and investment reserves certainly remain substantive at roughly $440 million.  Still, analysts are pointing to faster-than-expected burn-down and investors are battering shares accordingly.  Then, there’s Apple, which just announced the presence of 6.5 million paying subscribers on Apple Music after just three months and could be dragging Pandora’s total listener levels.

More as the meltdown proceeds…

Updated: Pandora shares are now plunging more than 35% in Friday trading, more here.

Will somebody please give this company a business model?

According to just-disclosed financials, Pandora lost a crushing $85.9 million over the past three months alone, the latest in a string of monster quarterly losses.  That compares to a year-ago loss of ‘just’ $2 million, or one-cent per share.  The hemorrhaging is happening despite substantial revenues of $311.6 million, a 30% year-over-year increase, not to mention aggressive gains across advertising and subscription tiers.

The dour financial report comes just weeks after a monstrous, $450 million acquisition of Ticketfly, viewed by many analysts as supremely-overpriced and even unnecessary.  That was quickly following by a $90 million settlement over pre-1972 ‘oldies’ recordings, the latest round in an endless, hostile battle with rights owners.

Those expenses alone left a half-a-billion dollar dent in Pandora’s bank account, while raising serious questions of wild overspending.  Piloting the potential nosedive is Pandora CEO Brian McAndrews, who offered a stunningly blue-sky assessment.  “Our acquisition of Ticketfly will be truly transformative, extending our long-standing strength in music discovery to the large and fast-growing world of live events,” Andrews noted in a manner reminiscent of George Bush’s ‘Brownie’ speech in New Orleans.  “Additionally, with our pre-1972 settlement, we are continuing to strengthen our relationships across the music landscape by resolving an historic source of tension.”

“This progress points to a greater opportunity to work collaboratively toward a bright future for music in a digital era, those who make it, and the fans who love it.”

That’s according to the New York Post, which is now reporting that Pandora has agreed to settle over the contentious issue of pre-1972 recordings.  Specifically, the legal question has been whether companies like Pandora are responsible for paying performance royalties for recordings released prior to that date.

The $90 million payout would pale in comparison to a recently-ordered $210 million for Sirius XM Radio, though Pandora’s settlement apparently only covers 2015 and 2016.  The suggests a far larger liability ahead for Pandora, based on the Post’s reported estimate.

The Sirius royalty decision followed years of litigation by recording labels, with oldies band The Turtles (think “Happy Together”) ultimately spearheading the victory.  Indeed, on the momentum of the monstrous Sirius decision, the Turtles soon started litigating against Pandora.

Besides being a year during the Nixon administration, 1972 marks the all-important date when recording copyright was officially federalized by US Congress.  That raises complicated questions over whether broadcast performance rights apply to a patchwork of state-based copyrights, with companies like Sirius and Pandora predictably arguing that they don’t.

Pandora’s expansion into ticketing sounds interesting, but does it make solid business sense?  So far, Wall Street is having difficulty with Pandora’s rationale for acquiring Ticketfly for a lofty $450 million, with shares sinking substantially following the announcement.

“…exceedingly expensive”

Wedbush analyst Michael Pachter was taken aback by an acquisition that seemed “exceedingly expensive,” while pointing to major technological integration and core competency concerns.  “We see little value added for Pandora beyond promoting artists, and note that Pandora has limited experience or aptitude in promoting or hosting concerts,” Pachter continued.

This just doesn’t seem to be stacking up strategically, especially for a company struggling to achieve real profitability.  And the biggest factor determining profitability will be royalty commitments, not ticketing.  “Investors remain focused on the [Copyright Royalty Board] rate determination, expected late this year,” Pachter continued.

Wedbush maintained its ‘Outperform’ rating, but dialed down its pricing target from $27 to $26.

Theoretically, companies can’t go on forever without turning a profit, though perhaps Pandora’s problem is diversification.  Or, lack thereof: as ad-supported online music proves to be one of the worst business models on the planet, Pandora is smartly branching out into something else: ticketing.

As of this (Wednesday) morning, Pandora has confirmed its $450 million purchase of Ticketfly, with a combination of stock and cash clearing the deal.  “Over the past 10 years, we have amassed the largest, most engaged audience in streaming music history,” Pandora CEO Brian Andrews hyperbolized.  “With Ticketfly, we will thrill music lovers and lift ticket sales for artists as the most effective marketplace for connecting music makers and fans.”

Pandora may not be the biggest platform in music (that would be YouTube), but it is a giant-among-men in the streaming radio space.  Pandora’s latest audience count was 80 million active listeners, arguably the most convincing proof-of-concept ever in online radio.  But Pandora is also proving that content costs can be crippling: the company remains almost entirely unprofitable after more than a decade in business, and frustrated rights owners like Sony/ATV Music Publishing are threatening to seriously elevate their rates.

Ticketfly might offer an escape from that.  According to Pandora cofounder Tim Westergren, advertisements for concert tickets quickly sell out on Pandora, which makes sense given the tightly-targeted audience.  That screams ticketing integration and diversification, with Ticketfly overseeing 1,200 different venue relationships and sales of more than 16 million tickets across 90,000 events in 2014 alone.

Of course, that’s a sideshow for the mega-venues controlled by Live Nation/Ticketmaster, though Ticketfly has also faced extremely tough competition from smart ticketing platforms like Bandsintown and Songkick.

Ticketing booth image by EvelynGiggles, adapted and transformed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

“A flat line for U.S. streaming subscribers is quite a worrying signal for music industry investors.”

Seeking Alpha analyst Pim Keunsler.

It’s been a rollercoaster for Pandora on Wall Street, but IPO hopefuls like Spotify may never get to ride.  And one huge concern for traders and investors, according to sources to Digital Music News, are soggy numbers around paid subscriptions.

In the US, streaming subscriptions rose a scant 2.5% to 8.1 million in the United States during the first half of this year, according to recent stats by the Recording Industry Association of America (RIAA).  Billboard has pointed to the cancellation of Muve Music as one possible explanation, though it’s unclear whether those 2+ million heavily-bundled subscriptions were solid revenue contributors in the first place.

Meanwhile, Apple Music is threatening to woefully under-deliver, with early intelligence suggesting initial paid subscribers in the low millions.  And Spotify, while surging towards 100 million total users, is showing less-than-spectacular gains on the paid side.

“…my general bullish outlook for the sector might be at risk.”

All of which has Wall Street nervous about the state of the music industry.  “A flat line for U.S. streaming subscribers is quite a worrying signal for music industry investors,” Seeking Alpha analyst Pim Keunsler wrote.  “I even consider music streaming growth the most important argument to invest in music-related stocks.  The most recent report by the RIAA indicates that my general bullish outlook for the sector might be at risk.”

There are deeper problems, according to insiders.  The biggest issue right now is happening in Paris, where a problematic Deezer is trying to go public.  As part of its IPO filing, federal law mandates the filing of financial and company data, a move that is exposing some serious issues with the world’s second-largest streaming service.  Chief among them is the lack of actual ‘subscribers’: according to IPO filings, roughly half of Deezer’s claimed 6.34 million subscribers haven’t even accessed a single song in the last month, while only 1.54 million are paying full fare.  “This could be ugly,” one major label executive observed.

Actual ‘subscribers’ are also an issue at Spotify, where a large percentage are paying discounted or introductory rates (we just don’t know how many).  But more pressing for Spotify are renegotiations with the Big Three major labels, all of whom are renewing right now and demanding heavy licensing costs.  Those deals, according to sources close to the negotiations, may also include ‘gated content,’ which means limiting content for free-access users, something Spotify has fiercely resisted.

But even if Spotify maintains its freemium, ad-supported tier intact, its major label licensing deals are unlikely to be renewed for more than one year, according to sources.  All of which puts Spotify’s IPO plans in an unhappy holding pattern.

Image of female brown bear by Tambako The Jaguar, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

This one is big for Pandora, really big.  So big that the New York Stock Exchange was forced to halt trading on Pandora (P) shares twice this (Monday) morning, based on extremely heavy buy volumes.  And the reason is this: according to details now confirmed by Pandora, the Register of Copyrights has agreed to consider a rate structure that mirrors independent deals hammered out between indie label consortium Merlin and Naxos, an independent classical label.

Those rates have been roundly criticized for being too low and negotiated with ‘pay-for-play’ payola sweeteners, but they also represent actual, ‘willing buyer, willing seller’ arrangements that the CRB may be willing to codify into law (the official decision happens in December).  This is a huge break for Pandora, and offers a far better financial story for investors.

Here’s the official statement on the matter from Pandora.  The complete decision of the CRB Register of Copyrights is embedded below.

Pandora today announced that the Register of Copyrights released an opinion addressing five novel questions of substantive law referred by the Copyright Royalty Board (CRB) in the “Webcasting IV” rate-setting proceeding. On July 29th, the Copyright Royalty Judges asked the Register to offer an opinion on the admissibility of specific direct-license benchmark agreements as evidence in the CRB proceedings.

“We are pleased that the Copyright Office affirmed the admissibility of Pandora’s agreement with Merlin as a valid benchmark in the Copyright Royalty Board proceedings,” said Dave Grimaldi, Pandora spokesman.

“We look forward to the certainty that December’s decision will bring, and are prepared to thrive in a number of potential outcomes.  Our investments in the business are providing real return, including almost $1.5 billion in royalties to date.  We are excited about the future of ad-supported music streaming and the benefits it brings to consumers and music makers alike.”

In this rate proceeding, the CRB will determine the rates and terms for webcasting under a statutory license for a term of January 1, 2016 to December 31, 2020. The trial portion of “Webcasting IV” ended with closing arguments on July 21st and the CRB is expected to issue a ruling no later than December 16th.

Pandora Public Affairs
Dave Grimaldi
202-380-2203
press@pandora.com

Pandora (P) is now witnessing a modest summer run-up go poof, thanks to a broader Wall Street meltdown that has music and entertainment stocks under pressure.  In Monday trading, shares of Pandora slipped another 4.03 percent to $17.13, with sub-$15 valuations likely in the near-term.

Earlier this month, Pandora pushed towards the $20-mark before getting brushed back at $19.38 on August 12th.  Since that point, Pandora has slipped a noticeable 11.38 percent, with the slide now heading into overdrive.

Of course, that’s now par for a very treacherous course.  Few are being spared from a Chinese tsunami that is punishing global markets, while punishing paper wealth and stoking fears of a greater economic downturn.  In a ‘Black Monday’ rout, China’s Shanghai composite index returned all of its 2015 gains by the close of trading, with stateside barometers like the S&P 500 handing back another 3.8 percent in a broader, multi-month correction.

In that volatility, the question is just how extra-vulnerable stocks like Pandora may be: despite substantial ‘Buy’ ratings with price targets averaging just over $20, a number of investment houses are shifting towards less complementary assessments.  That includes an ‘Overweight’ by Piper Jaffray and Albert Fried & Co., and a bearishly ‘Neutral’ rating from B. Riley with an accompanying $15 price target.

The question is how Pandora’s schooner will navigate the storm, analyst optimism notwithstanding.  Despite heavy surges in listening totals and continued dominance in the internet radio realm, Pandora has failed to post a profit in the past three years, with cash-burn now greater than $200 million since inception.  Indeed, that soggy resume has contributed to a broader 35-plus-percent dip in 2015, with looming licensing wars with mega-publishers like Sony/ATV furthering investor anxiety.

Pandora may be stiffing artists like Pharrell, Aloe Blacc, and arguably every songwriter and producer, but when it comes to office space, penny rates need not apply.  According to City of New York commercial real estate filings, Pandora has now more than doubled the space of its super-pricey, multi-level office spread on 125 Park Avenue, just south of bustling Grand Central Terminal.

Pandora first moved into the tony digs last summer, complete with a blockbuster mega-renovation that collapsed two floors into a spacious, cathedral-like workspace.  Now, those blueprints are mere doodles, with the 52,000 square foot spread expanding into a 104,000-plus square foot sprawl.

The original lease was at a reported $65 per square foot, which puts the current lease at $6.5 million per annum.

SL Green, the lessor, cited Pandora’s “rapid growth” in their expansion disclosure, though Pandora remains deeply unprofitable after roughly 15 years in operation.

The expansion one-ups other lavish-living Manhattan tenants like Spotify and Soundcloud, both of whom have secured ultra-luxurious digs in Gotham.  But the high-living raises serious questions about Pandora’s non-existent profitability, not to mention mounting frustration from a growing battalion of impoverished songwriters, producers, and artists.

Just recently, Pharrell’s publisher revealed a criminal $60 payout for the mega-hit “Happy,” despite one million plays on Pandora, while Aloe Blacc (pictured above) shared a $4,000 pay-stub for his co-writing of Avicii’s “Wake Me Up!” which garnered 168 million plays.

Seemingly always on the defensive, Pandora co-founder Tim Westergren pointed to incomplete stats that only pertain to songwriters, though according to songwriters, that’s exactly the point.  Currently, songwriters, publishers, and producers like Rodney Jerkins are demanding more than a paltry, 4% cut of Pandora revenues, with publishers pushing to direct-license Pandora outside of government-mandated rates.