|From: JakeStraw||1/15/2014 1:09:06 PM|
|Pandora station suggestions amp up personalization|
The Internet's top radio service adds station recommendations to its app for iOS and Android smartphones and tablets, aiming to stretch listening longer.
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|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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