|From: Glenn Petersen||11/15/2014 9:36:26 PM|
|Era of Free Digital Music Wanes|
Artists and Labels Prod Music Services to Convert Listeners to Subscribers
By Hannah Karp
The Wall Street Journal
Updated Nov. 13, 2014 5:07 p.m. ET
Enjoy the free tunes while you can: The party may be winding down as the music industry prepares to make fans pony up.
Over the past few years, record companies have allowed music streaming services such as Spotify AB to offer a variety of ways for listeners to try the services free, ultimately hoping to lure them into $10-a-month subscriptions, and away from file-sharing sites and other illegal sources of free music.
Users of Spotify’s free smartphone app, for example, can play any artist’s catalog they choose, provided they shuffle the songs. Spotify’s nonpaying laptop and tablet listeners can even listen to particular songs on-demand, accompanied by ads. Last fall Spotify introduced a free custom radio service for mobile users. In all, 37.5 million people use various free versions of the service, compared with 12.5 million who pay a monthly fee.
Apple Inc. ’s Beats Music, meantime, offered a 90-day trial period to its subscription service for most of this year to AT&T ’s wireless family-plan customers, while Google Inc. offers a 30-day free trial to its All Access subscription service, no credit card required.
Now that fans have had a taste, record labels are feeling less generous as they head into their next round of licensing negotiations. Some plan to use their leverage to start cutting the free access. One major-label executive said he regretted ever having agreed to allow licensees to offer any on-demand listening features free. “In hindsight we made a mistake,” he said.
The major record labels— Vivendi SA ’s Universal Music Group, Sony Corp. ’s Sony Music Entertainment and Access Industries’ Warner Music Group—now want music’s subscription services to curtail free-trial periods, sell more ads on their free services, get customers’ credit card information sooner and invest more in reducing subscriber churn rates.
Even Google’s YouTube—long the largest de facto free music service on the Internet thanks to its millions of free music videos—is getting with the program. On Wednesday the company disclosed details of a long awaited paid subscription offering, called Music Key, that will cost $10 a month.
An average user of free, ad-supported streaming services generates revenue of around $4 a year to record companies, according to one label executive, compared with between $50 and $75 a user in the record-buying age. Spotify subscribers currently pay $120 a year, of which about 70% goes to record labels and music publishers. Users of free services such as Pandora Media Inc. ’s custom radio service far outnumber those paying for Spotify and its competitors.
Some digital music services, though, are pushing back in initial talks, worried that cutting the free perks too fast could scare away users before they fully understand how the subscription model works, according to a person familiar with the matter.
“Our free service drives our paid service,” Spotify Chief Executive Daniel Ek wrote on the company’s blog this week.
The tension became apparent earlier this month when pop star Taylor Swift withheld her latest album, “1989,” from Spotify, and pulled her entire catalog from the service shortly afterward. Her label had sought to make her music only available to Spotify’s paying subscribers, but Spotify insisted that she, like all artists on the service, make songs available to both its paying and free users, hoping to keep the free service attractive enough to keep attracting subscribers.
The drive toward converting free to paid listeners is the latest in a series of radical changes in music industry economics, starting in the late 1990s when fans started uploading and sharing their music online, says Universal Music Chairman Lucian Grainge. Speaking at The Wall Street Journal’s WSJD Live technology conference last month, Mr. Grainge pointed to the ’90s file-sharing boom as the beginning of a 14-year, 50% decline in U.S. record sales.
For the first 10 of those years, he said, the industry was focused on “trying to contain file sharing and piracy.” More recently, music companies have turned their attention to “stopping the decline” by creating as many new platforms and services as possible to start capturing some money.
Those efforts appear to have been successful with recorded-music revenues stabilizing over the past few years, and streaming-revenue growth offsetting declines in download sales.
But the third phase, he said, is “going to be accelerating paid subscription and experimentation,” he said, with “an enormous, high-margin, regular, recurring prize at the end of it.”
Free, ad-supported offerings have helped hook music fans on streaming, he said, but “ad-funded is not a sustainable business model.”To help the subscription business grow, Mr. Grainge said at the conference that Universal Music planned to experiment with price and membership terms, possibly offering subscribers everything from interaction with artists to access to live events.
Many of Universal Music’s current licensing deals with streaming partners expire at the end of this year, according to a person familiar with the matter.
“Everything’s on the table. We’re working to create as many opportunities [as possible] for people to buy, or pay for their music,” he said. “I see a world very, very soon where there will be a whole series of price points for the consumer.”
Some labels are looking to Sirius XM Radio Inc., the satellite radio service, as a model. Though its technology may no longer be cutting-edge, Sirius is adept at amassing loyal customers. Many of Sirius XM’s nearly 30 million subscribers pay $15 a month, and nearly half of the people who buy new cars with the service preinstalled end up subscribing. Less than 2% cancel their subscriptions each year.
Among Sirius XM’s tactics: the company has taken some users’ credit cards up front to activate their free trials. Spotify and Beats Music don’t require credit cards until users are ready to subscribe, but they could easily get credit cards sooner, for example by charging $1 for a lengthy free trial, one label executive said. Sirius also has discounted yearly payment plans that hook subscribers for longer periods, and offers private concerts and artist meet-and-greets for subscribers as well.
One challenge, though, is that for many consumers, the free, ad-supported radio services that have amassed far more users in the U.S. appear to have become substitutes for $10-a-month on-demand services, even though the two camps offer very different products.
“Most consumers don’t know the difference between Spotify and Pandora,” said one label executive. Internet radio giant Pandora Media Inc. has nearly 80 million active users in the U.S., close to double the number that Spotify has world-wide. IHeartMedia Inc. ’s iHeartRadio and Apple’s iTunes Radio have about 100 million users combined, and some executives worry such personalized radio services may be blinding some consumers to the advantages of paid subscription services.
To correct the problem, he said, record labels must tweak both the types of features and the amount of content that they allow their technology partners to offer free, he said.
“If they’re not serious about having a paid tier and improving monetization, we’re going to be less interested in working with them,” he said.
Write toHannah Karp at firstname.lastname@example.org
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|From: Glenn Petersen||11/25/2014 5:10:36 PM|
|Spotify Is a Booming, Billion-Dollar Business |
By Peter Kafka
November 25, 2014, 8:50 AM PST
Spotify says it has 12.5 million paying subscribers. If you do some very simple math, you can guesstimate that the company is going to end up doing more than a billion dollars in revenue this year.
Another reason you can feel comfortable guessing that: A year ago, when the music streaming service was smaller, it had already hit the $1 billion mark.*
That number comes courtesy of a new filing Spotify made today in Luxembourg, which spells out its 2013 financials in considerable detail. That doesn’t tell us how the company did this year, of course. But it’s very helpful to get a sense of direction.
Big picture: As of last year, Spotify was growing very fast, but wasn’t making any money. The good news is that the company’s top line was growing faster than its losses, which is one of the reasons it could raise money at a $4 billion valuation a year ago. And it suggests that CEO Daniel Ek’s argument — that the company could indeed be profitable if it didn’t plow more money into growth — might hold up.
Here’s a snapshot of the company’s P&L from last year. Note that revenues were up more than 70 percent, while its operating loss grew by less than 20 percent.
And here’s a breakdown of revenue and expenses. Not surprisingly, the bulk of Spotify’s revenue — $834 million (605 million euros) — went back out the door, via payments to music rights holders and other distribution costs. That’s the number that Taylor Swift and other artists say should be even higher.
The other thing to note that is that Spotify’s subscription revenues are increasing much faster than its ad revenues. If you want a positive spin on that, you would argue that this is a sign of health for its subscription business — last year, the company ended up with 8 million subscribers paying about $10 a month; earlier this month the company said it had 12.5 million paying subs.
The half-empty view: Spotify’s advertising business, which is supposed to defray the cost of all that free music it provides, may not get big enough to satisfy rights holders.
And for music business completists, another note: We can now see what Spotify paid for Echo Nest, the music data service, last March. That deal, which cost 55 million euros (about $72 million, at the exchange rate at the time), was paid for primarily in stock. The company had raised a reported $26 million.
* We’re using the Euro/dollar exchange rate from Dec. 30 2013 for most of the numbers in this article.
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|From: Glenn Petersen||10/7/2015 9:09:12 AM|
|Pandora Acquires Ticketfly For $450m In A Bid To Sell Tickets To Live Music Shows|
by Matt Burns ( @mjburnsy)
October 7, 2015
Pandora has a new tool in its belt to fight against Apple Music and Spotify. The music streaming just announced it will purchase Ticketfly, a TicketMaster-type site, for $450m in cash and stock. Pandora says in a press release that Ticketfly’s service will allow Pandora listeners to better find live music events.
It’s unclear at this point how deep the Ticketfly integration will go.
“This is a game-changer for Pandora – and much more importantly – a game-changer for music,” said Brian McAndrews, chief executive officer at Pandora, in a released statement today. “Over the past 10 years, we have amassed the largest, most engaged audience in streaming music history. With Ticketfly, we will thrill music lovers and lift ticket sales for artists as the most effective marketplace for connecting music makers and fans.”
Ticketfly currently works with 1,200 venues and event promoters in North America. The service primarly focuses on live music although briefly dabbled in sporting events as well.
This is the latest in Pandora’s quest to stay at the top of the music streaming battle. Last month, at TechCrunch Disrupt SF 2015, Pandora co-founder and chief strategy officer Tim Westergren took the stage with our own Josh Constine to talk about Pandora’s unique model in the very competitive music space.
“Over time, clearly people prefer what Pandora does. It’s important to know that there are two ingredients,” he said. “A big part of Pandora is the music genome project — that’s a hand-built database. They spend days headphones on, listening to songs and manually tagging them.”
It’s likely that Pandora will use this extensive data set to attempt to sell tickets through Ticketfly to events it knows listeners will enjoy.
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|From: Glenn Petersen||2/11/2016 3:08:20 PM|
|Pandora Is Said to Have Held Talks About Selling Itself|
By LESLIE PICKER and BEN SISARIO
New York Times
FEB. 11, 2016
Fall Out Boy performed at Pandora Holiday, a concert sponsored by the music service, at Pier 36 in New York on Dec. 10. Credit Theo Wargo/Getty Images
Pandora Media, the largest Internet radio service, has held discussions about selling the company, according to people briefed on the talks.
Pandora is working with Morgan Stanley to meet with potential buyers, said the people, who spoke on condition of anonymity because they were discussing private matters. The talks are preliminary and may not lead to a deal, the people said.
For Pandora, it would be a curious time to sell. Its shares are yielding a market value of $1.8 billion, down from more than $7 billion two years ago. The stock has fallen more than 60 percent since October.
Pandora has the largest number of users for music streaming, but the competition is encroaching. Spotify is said to be arming itself with another $500 million in capital, and Apple Music recently surpassed 10 million paying users. Pandora’s users peaked at 81.5 million at the end of 2014, declining to 78.1 million in the third quarter.
The company is spending heavily to attract more users, and its ability to make money from those users may be waning. In the third quarter, Pandora lowered its full-year financial guidance, expecting its adjusted earnings to be $51 million to $56 million, down from the $75 million to $85 million it projected in the quarter before.
Pandora is set to announce fourth-quarter and full-year earnings after the close of the market on Thursday. Analysts surveyed by Standard & Poor’s Capital IQ are expecting Pandora to post $1.2 billion in revenue for the year, an increase of 27 percent from 2014, the company’s slowest annual growth ever.
A panel of federal judges increased the royalty rate that companies like Pandora have to pay record companies. Internet radio services now have to pay 17 cents for every 100 times they play a song for listeners who do not pay for subscriptions, up from 14 cents.
Investors were happy with this news, as many had expected the rate to be increased to 25 cents for every 100 plays, the level that the music industry requested.
Representatives from Pandora and Morgan Stanley declined to comment. Brian P. McAndrews, Pandora’s chief executive, is a director at The New York Times Company.
Pandora was introduced in 2005 and uses its own “music genome” technology to analyze its customers’ musical tastes and feed them a radiolike stream tailored to what they like. The company generates 80 percent of its revenue from advertising, allowing listeners to stream music free, with ads after every few songs. Pandora also has about 3.9 million customers who pay $5 a month to remove the ads.
Last year, Pandora announced deals to pay $450 million for Ticketfly, an online ticketing company, and $75 million for the assets of Rdio, a struggling competitor.
Executives at Pandora, whose service is available only in the United States, Australia and New Zealand, have said that they want to expand around the world and turn Pandora into a more robust service that can compete with so-called on-demand outlets like Spotify, Rhapsody and Apple Music, which let users choose exactly what songs to listen to.
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|From: Glenn Petersen||12/3/2016 10:10:09 AM|
|Sirius Approaches Pandora’s Board With Takeover Interest |
by Alex Sherman
@sherman4949 More stories by Alex Sherman
and Lucas Shaw
@Lucas_Shaw More stories by Lucas Shaw
December 2, 2016 — 2:42 PM ESTDecember 2, 2016 — 5:44 PM EST
-- Board hasn’t responded to new engagement from Greg Maffei
-- Pandora advisers have begun soliciting interest from buyers
Sirius XM Holdings Inc. Chairman Greg Maffei recently approached Pandora Media Inc.’s board to express renewed interest in a takeover of the Internet radio provider, according to people familiar with the matter, following up on its offer from earlier this year.
Sirius’s latest approach didn’t include a price for Pandora, said one of the people, who asked not to be named because the discussions are private. Sirius offered about $15 per share to acquire Pandora earlier this year, the person said.
Pandora hasn’t yet responded to the Sirius approach, the person said. Still, Pandora’s advisers have begun reaching out to other potential suitors, another person said.
Pandora shares rose earlier Friday after a CNBC report that the company is willing to engage with Sirius. They closed 16 percent higher at $13.33, valuing the company at about $3.1 billion. Sirius fell 5.6 percent to $4.30, giving it a market value of $20.8 billion.
Pandora hasn’t decided if it will restart talks with Sirius, one of the people said.
Representatives for Pandora and for Greg Maffei declined to comment. A Sirius spokesman didn’t immediately respond to a request for comment.
Since Sirius made its first approach, Pandora has taken steps to shake up its business model as it seeks to placate activist investor Corvex Management LP.
The company hired Centerview Partners LLC to advise on strategic options, people familiar with the matter said in July. Centerview’s role could be expanded to run a sale process with Morgan Stanley for Pandora, the people said at the time.
Though Pandora dominates the online radio market it pioneered, the company’s growth has slowed in recent years, at the same time as on-demand services Spotify Ltd. and Apple Music have added millions of users.
Co-founder Tim Westergren, who returned as Pandora’s chief executive officer in March, is trying to almost quadruple sales to $4 billion by 2020 by going into new businesses, such as ticket sales and concert promotion, while converting free users into paying customers.
The company made three acquisitions last year to diversify beyond online radio, including ticket seller Ticketfly, and is about to introduce a new on-demand service similar to Spotify.
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|From: Glenn Petersen||9/24/2018 10:04:47 AM|
|iriusXM to buy Pandora in all-stock deal valued at $3.5 billion|
Michael Sheetz | @thesheetztweetz
- The merger agreement includes a "go-shop" provision, where Pandora "may actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals."
- SiriusXM expects the deal to close in the first quarter of 2019.
Published 2 Hours Ago Updated 52 Mins Ago CNBC.com
Satellite radio company SiriusXM plans to acquire music streaming service Pandora in a $3.5 billion all-stock deal unveiled Monday.
The agreement includes a "go-shop" provision where Pandora "may actively solicit, receive, evaluate and potentially enter negotiations with parties that offer alternative proposals following the execution date of the definitive agreement."
Acquiring Pandora would make SiriusXM the world's largest audio entertainment company, with over $7 billion in combined revenue expected in 2018. The deal would bring together SiriusXM's 36 million subscribers in North America and Pandora's more than 70 million monthly active users.
Pandora shares rose 8.3 percent to $9.85 a share in premarket trading, while Sirius stock fell 5 percent to $6.63 a share.
Shareholders will receive 1.44 of newly issued SiriusXM shares for each Pandora share they hold, the companies said. The implied Pandora price from this deal is $10.14 a share, or a 13.8 percent premium over a 30-day volume-weighted average price.
Pandora stock has soared nearly 90 percent during the past year. While the music streaming business is thick with competition — names such as Spotify, Amazon and Apple have their own platforms — Pandora reported a smaller-than-expected earnings loss for its second quarter and announced it had about 6 million premium subscribers.
Evercore ISI analyst Anthony DiClemente said he wouldn't rule out a higher bid for Pandora from a tech giant, but he believes "Apple and Spotify have had a chance to look at Pandora already."
"I do think once the market kind of gets a better feel for what the strategy is at the SiriusXM level, then we'll start to see the stock normalize," DiClemente said on CNBC's "Squawk Box."
SiriusXM expects the deal to close in the first quarter of 2019.
The satellite radio company signed a partnership with Netflix in July to create a comedy channel. That channel is slated to launch in January and will feature new material from comedians promoted in Netflix original content.
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