PANDORA A PYRAMID SCHEME!

[davideduardo]

Well, I guess this tells us that people who stream prefer the wider selection of pure-play purveyors like Pandora than the short playlist streams of the radio stations. Next, how does Pandora rank against radio, not just radio streaming. Most of all, is Pandora, or any other pure-play streamer, making money?

Pandora is very close to profitability, per the numbers just released. They are in a quiet period, per pre-IPO requirements, so we won't hear much from them for a while until the IPO pops.

As to "wider selection" the data available shows that people tend to build various Pandora stations for themselves. Apparently (some research has been done in reverse by finding Pandora users and questioning them) the reason for having various Pandora stations is mood driven, just like "regular" radio. But the libraries of the people who actually do the like and dislike options tend to be 100 to 200 songs in size, smaller than the average radio station.

Pandora has 18-34 and 18-49 listening levels (active sessions) in major markets that place it's non-paid services among the top two or three stations in each market. In other words, Pandora in NYC has about the listening of WHTZ or WKTU. Or of Power or KROQ in LA. That means they can go for local sales in each market, competing on rate with the top tier of local stations, but able to deliver consumer data often superior to that which terrestrial delivers (due to the registration process).

 

[TheBigA]

Pandora in NYC has about the listening of WHTZ or WKTU. Or of Power or KROQ in LA. That means they can go for local sales in each market, competing on rate with the top tier of local stations, but able to deliver consumer data often superior to that which terrestrial delivers (due to the registration process).

The listening isn't exactly comparable on many levels.

 

[davideduardo]

David it's all hype.. smoke and mirrors. They can say anything they want as there is no watchdog monitoring them. It's all a fad thing and the truth is they are losing money. Broadcast.com dissolved into nothing and that's all this is.

As has been pointed out, Broadcast.com was sold to Yahoo, which proceeded to destroy it. The trail of wrong decisions made by Yahoo is long and well marked, so that comes as no particular surprise.

Broadcast.com was simply an aggregator of radio streams when streams were in their infancy. It offered no value added except convenience in an area nearly devoid of ease of use back then. Yahoo did not recognize the content issue... typically.

The IPO for Pandora includes a prospectus, done in accordance with SEC rules on such offerings. You'll find they have audited financials, and you can see the burn rate and how they are very close to profitability. In fact, were they not ramping up for very expanded sales and usage, they would be profitable now but they have added about 200 employees, including staffing of regional sales offices in about 8 cities so far, which would impact any company for a quarter or two.

Pureplay is hardly a fad. Almost all the streaming growth in the last year has been pureplay, and radio's share of streaming is down to 40% from 50% last year.

This is sort of like saying that TV was a fad (hundreds of quotes from prominent people supported that contentention in the 40's) or that color TV was a fad (same number of quotes) or that MTV was a fad... or the iPod... and so on.

Obviously, the salmon are running in this thread... who else spends so much effort swimming against the current?

 

[davideduardo]

Pandora in NYC has about the listening of WHTZ or WKTU. Or of Power or KROQ in LA. That means they can go for local sales in each market, competing on rate with the top tier of local stations, but able to deliver consumer data often superior to that which terrestrial delivers (due to the registration process).

The listening isn't exactly comparable on many levels.

If Pandora has 43,000 active sessions in NYC and WKTU has about the same AQH, to an ad buyer they are the same.

 

[TheBigA]

If Pandora has 43,000 active sessions in NYC and WKTU has about the same AQH, to an ad buyer they are the same.

As I said, they're not the same thing. The audience use is different, and the ads the buyer schedules are different.

 

[davideduardo]

If Pandora has 43,000 active sessions in NYC and WKTU has about the same AQH, to an ad buyer they are the same.

As I said, they're not the same thing. The audience use is different, and the ads the buyer schedules are different.

Only because Pandora is mostly bought as part of national buys, and not local as yet. Pandora is just now looking at improving their local sales presence in individual markets, so there isn't much activity.

I don't see any difference in listening to music on a mobile device today and using my 7-Transistor Zenith pocket radio when I was still in the 12-24 demo. Or, for that matter, now.

 

[TheBigA]

I don't see any difference in listening to music on a mobile device today and using my 7-Transistor Zenith pocket radio when I was still in the 12-24 demo. Or, for that matter, now.

That may be your personal experience, but we both know and have seen the usage reports that haven't substantiated that among the majority of people. Specifically in terms of TSL, but in other ways as well. People simply aren't glued to the radio, Pandora or otherwise, as they were in the 60s.

 

[davideduardo]

I don't see any difference in listening to music on a mobile device today and using my 7-Transistor Zenith pocket radio when I was still in the 12-24 demo. Or, for that matter, now.

That may be your personal experience, but we both know and have seen the usage reports that haven't substantiated that among the majority of people. Specifically in terms of TSL, but in other ways as well. People simply aren't glued to the radio, Pandora or otherwise, as they were in the 60s.

People were never glued to the radio the way we thought they were.

A study done in 1950 and referred to in Garay's scholarly biography of Gordon McLendon showed the average time spent listening to the radio in America to be 21 hours. Fast foreward to the 80's... 21 hours. The 90's. 21 hours.

Now, we have PPM and it shows that the attention span to radio is around 11 minutes, and the average person listens for 12 hours (give or take, varies by market, void in Nebraska, which has no PPM markets).

Even when a person listens much of the day, we find that the actual listening divides up into little bits, interrupted by taking out the trash or going for a cup of coffee...

Internet streams are easy to measure by means of the connection time. Only since we've had the PPM could we see that there is no difference in usage, particularly since much streaming is listened to on the "radio replacement" the smartphone.

 

[TheBigA]

Internet streams are easy to measure by means of the connection time. Only since we've had the PPM could we see that there is no difference in usage, particularly since much streaming is listened to on the "radio replacement" the smartphone.

But there is quite a difference in usage, and you're overstating the amount of listening on phones.

 

[joshzz]

David,

It's all smoke and mirrors. Pandora doesn't have the listeners it claims. The company can make up any number it desires but it's not reality.

I own a radio station network and we stream. If I desired, we could set up a system in another building and then have the people bring up mutliple sessions of our player on their computers. We could bring up a thousand sessions or even a hundred thousand. What number do you want?

Trust me, this is pandora.

 

[davideduardo]

Internet streams are easy to measure by means of the connection time. Only since we've had the PPM could we see that there is no difference in usage, particularly since much streaming is listened to on the "radio replacement" the smartphone.

But there is quite a difference in usage, and you're overstating the amount of listening on phones.

Per Pandora, 60% of connections are on mobile devices... phones, iPads, etc.

Today's usage of any entertainment medium is going to be more fragmented, since there are so many more options. But the fact that radio TSL was never what we thought it was is still evident as we see that long perceived TSL is actually a set of short spurts with lots of interruptions... we just had no way of measuring that previously.

 

[davideduardo]

It's all smoke and mirrors. Pandora doesn't have the listeners it claims. The company can make up any number it desires but it's not reality.

Do a search on "Ando Media" and "ranker" and look at the webcasting ratings... they also include the broadcast groups and other pureplays as well as iHeart and such.

The numbers are more real than Arbitron data as Arbitron uses a sample while the web numbers are actual measured session starts and connections.

I own a radio station network and we stream.

I'd certainly enjoy a link to your stream.

If I desired, we could set up a system in another building and then have the people bring up mutliple sessions of our player on their computers. We could bring up a thousand sessions or even a hundred thousand. What number do you want?

And you would be paying for each and every stream.... like the tens of millions that Pandora pays in digital and performance royalties. Do you think anyone would do that, month after month?

In any case, pretty much every day I hear comments from at least one person about Pandora. I don't hear comments on radio stations. And when I was actively "touring" and doing music tests, as many as half of people tested would state they used Pandora in the last few days... nearly as high as Facebook and as high as Youtube.

Anyone in radio who does not think that Pandora is radio and who thinks Pandora is not real is only fooling themselves.

 

[TheBigA]

Per Pandora, 60% of connections are on mobile devices... phones, iPads, etc.

And what is the average length of those connections?

And then, for the sake of consistency, compare that to other forms of internet radio.

 

[davideduardo]

Per Pandora, 60% of connections are on mobile devices... phones, iPads, etc.

And what is the average length of those connections?

The Ando Media data is online. Pandora connections average longer than PPM average incident length for terrestrial radio, and also longer... by a tiny bit... than music radio station streams complete with the 15 minutes of commercials.

And then, for the sake of consistency, compare that to other forms of internet radio.

It compares favorably to rated music radio, both streams of terrestrial and pure play, like Slacker.

It is less than streams of talk stations of all kinds. The averages of companies Emmis and Bonneville that have a number of significant talk stations are higher, but the music streams are within the rather standard range.

Of course, Pandora has as many session starts and AQH listening as the next 19 stations in the top 20 combined... including Clear, CBS, and all the rest.

 

[TheBigA]

The Ando Media data is online. Pandora connections average longer than PPM average incident length for terrestrial radio, and also longer... by a tiny bit... than music radio station streams complete with the 15 minutes of commercials.

http://harkerresearch.typepad.com/radioinsights/2009/11/pandora-radios-future.html

 

[davideduardo]

The Ando Media data is online. Pandora connections average longer than PPM average incident length for terrestrial radio, and also longer... by a tiny bit... than music radio station streams complete with the 15 minutes of commercials.

http://harkerresearch.typepad.com/radioinsights/2009/11/pandora-radios-future.html

That article uses September numbers, now significantly outdated due to the immense growth of pureplay and the very slow growth of station streams, and fails to note that Pandora is a pure music play, while most of the others with higher TSL either have few stations (Inner City) or have a large group of talk formatted stations.

In any event, ad sales are far more based in AQH than in cume, and the AQH of Pandora online is right around equal to the AQH of all the top 20 (less Pandora) major broadcasters and aggregators together.

 

[TheBigA]

That article uses September numbers, now significantly outdated due to the immense growth of pureplay and the very slow growth of station streams, and fails to note that Pandora is a pure music play, while most of the others with higher TSL either have few stations (Inner City) or have a large group of talk formatted stations.

OK, while we're at it, Pandora isn't a single station or even a group of stations, but the cumulative result of MILLIONS of stations. FCC rules prevent any company from offering that many broadcast stations. Even CC's IHeartRadio doesn't have that many stations. And you seem comfortable comparing Ando with Arbitron. I don't think the metrics measure up equally.

The bottom line is this: Most Pandora users (and I've interviewed lots of them) don't like commercials. They use Pandora (and satellite to a degree) to get away from Spam. They're willing to put up with an ad or two to get what they want. But Pandora users are far less patient about advertising than users of broadcast media. I think those statistics will concern advertisers.

 

[TheBigA]

As reported in todays RBR:

http://www.rbr.com/radio/pandora-expects-stock-to-price-at-7-9-per-share.html

I agree with the views in this article. I say short it, take the quick profits, and enjoy it while you can.

But this is not a long term investment. The company and product line isn't diversified. The business plan isn't very good. Even if they sign up a bunch of local associates to attract local ads, the downside remains the high cost of content, which increases as they become more popular. They need to fix that.

 

[joshzz]

David Eduardo wrote: "Do you think anyone would do that, month after month?"

He is referring to setting up "fake users". My answer is absolutely yes!

I wouldn't do it myself as it is unethical but establishing fake connections to Pandora for the sake of exaggerating the number of listeners is unfortunately, most likely, the reality.

 

[secondchoice]

DavidEduardo:

Would you buy and hold Pandora stock? I have made the last two years of house payments from shorting Citadel. Just for the record it was the only stock I have ever shorted. I have looked at this and Pandora could be a takeover target buy Amazon or a content provider. (Do not laugh but AOL) or TW* would be a good fit. Just who buy who is a question.

* Time had a bad experience with AOL but this would be better.