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Will Pandora Survive

First of all, CBS News should disclose that its co-owned CBS Radio competes with Pandora in the internet platform. MSNBC always states that it is a partnership with Microsoft whenever it reports in computer or software stories.

Having said that, the 2015 rates will most likely be subject to negotiation, and Pandora is the golden child of the music industry. They are not going to kill the golden child. The goal of the music industry is to allow users of their content to make the barest amount of money possible so to remain in business. As they've said many times, it's not in their interest to put the users of their content out of business. So they will come to some kind of agreement similar to the one they made a few years ago.

However, this points out the total inequity of the current digital copyright laws with respect to all other users of content. The DMCA needs to be rewritten, and the rate setting system need to be taken away from the CRB. Broadcast radio has a far more equitable system, and for that reason, the music industry doesn't like it. But this is a key reason why the NAB is so opposed to allowing a new performance royalty to be enacted, with rates being set by the CRB.

Meanwhile, even if the royalty issue was satisfied, Pandora would be looking at a very difficult future as a profit-making company. My view is they need to find a way to diversify their income. Or they need to be bought by a company like Apple or Google. Or perhaps one of the broadcasting companies. But Pandora as an independent company with one product and one revenue stream is not very practical, and it's why I have not invested in them.
 
The article leaves out the possibility of licensing directly with the labels. Pandora has stated that they didn't want to do that, but it is a viable solution for a company the size of Pandora. Slacker and every on-demand service minus grooveshark have already done this and SiriusXM announced plans to do the same in recent months. No doubt that it wouldn't be fun for Pandora, but it could happen if they needed to do so.

I don't think Pandora has much of a future as a subscription service unless they have direct licenses. Pandora One is very cheap and at only $3 per month, it is in theory possible for Pandora to actually lose money rather under their current licensing. Without a direct licensing deal, they may not be able to diversify their income.
 
Casey said:
No doubt that it wouldn't be fun for Pandora, but it could happen if they needed to do so.
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I agree, and it all rests on the shoulders of founder Tim Westergrin. As long as he's with the company, they will likely play by the rules.
 
I don't get how Pandora makes money. When I've listened for hours, they run almost NO audio commercials on their mobile app - just a few shady banner ads on the bottom of the screen, and I heard one 30 second ADT ad once. When I tried Slacker out, I heard some audio commercials for some well-known companies quite frequently. Even if P has ads on their website, I find it hard to believe that makes up for the lack of them on mobile, where a lot of listening is likely done.
 
carolinaradio said:
I don't get how Pandora makes money. When I've listened for hours, they run almost NO audio commercials on their mobile app - just a few shady banner ads on the bottom of the screen, and I heard one 30 second ADT ad once. When I tried Slacker out, I heard some audio commercials for some well-known companies quite frequently. Even if P has ads on their website, I find it hard to believe that makes up for the lack of them on mobile, where a lot of listening is likely done.
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I listen on their phone app, and they do run occasional ads (for the free option -- people who pay get commercial free). Living Social is a big advertiser, but I've also heard some from auto companies, cable TV networks (TNT) and others. There are some blue chip companies advertising with Pandora.
 
Pandora was (and seems to still be) having difficulty getting enough advertisers for their mobile service. That shouldn't be a problem for much longer though, as Pandora is actively working to get more sales teams on both the national and local level. I would expect the problem of having too few ads for their mobile service to be taken care of in the next few months. This is probably the main reason why some people hear more ads than others.
 
Salty Dog said:
I ask myself one question: Is it in the best interests of the music industry to kill it? My guess is that it is probably not.
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As I said in my post, the answer is definitely no. I've been to Tim's seminar, and he is happy to promote their agenda all day long. And as one label rep said, they don't make any money if all content users go out of business. But what they want to do is have an element of control. They want to place the bar pretty high so not everyone can use their content, and price is one way to do that. Then Pandora negotiates with SoundExchange, and gets a discount based on the amount of money they bring in. Most other users can't get that discount. At least that's what happened last time.
 
I think over the air radio will fight any royalty increase. Since Iheart streams over the air stations, it might (could)be the winner of this battle.

With more companies joining the Iheart train, it could make it very difficult for Pandora to survive. (based on the current royalty rates)

It could be in the business plan to allow any terrestrial stations to join Iheart.

I think a single portal would benefit the broadcast industry.
 
TheBigA said:
Salty Dog said:
I ask myself one question: Is it in the best interests of the music industry to kill it? My guess is that it is probably not.
Click to expand...

As I said in my post, the answer is definitely no. I've been to Tim's seminar, and he is happy to promote their agenda all day long. And as one label rep said, they don't make any money if all content users go out of business. But what they want to do is have an element of control. They want to place the bar pretty high so not everyone can use their content, and price is one way to do that. Then Pandora negotiates with SoundExchange, and gets a discount based on the amount of money they bring in. Most other users can't get that discount. At least that's what happened last time.
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By reduced rates do you mean the Pureplay rates? I not many companies got in on the rates. Actually, I only know of AccuRadio and Pandora for sure, though I am sure more did.

musiconradio.com said:
I think over the air radio will fight any royalty increase. Since Iheart streams over the air stations, it might (could)be the winner of this battle.

With more companies joining the Iheart train, it could make it very difficult for Pandora to survive. (based on the current royalty rates)

It could be in the business plan to allow any terrestrial stations to join Iheart.

I think a single portal would benefit the broadcast industry.
Click to expand...


I doubt Iheart will be the main portal. Cumulus was smart to join it for now, to gain promotion, but it would be unwise to use Iheart long-term. Same goes for the other broadcasters. Clear Channel will use it to promote their own content over the competitors. Similar to how CBS used AOL radio to promote their own content. If there is going to be a single portal then it needs to be owned by a company that does not own a single station. I thought Tunein would be that single portal, but that is becoming increasingly unlikely with every passing day.
 
Casey said:
I doubt Iheart will be the main portal. Cumulus was smart to join it for now, to gain promotion, but it would be unwise to use Iheart long-term. Same goes for the other broadcasters. Clear Channel will use it to promote their own content over the competitors.
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I was thinking about what would make competitors willing to go along. Maybe they have an agreement that at some point Clear Channel will spin it off and they can all receive shares.
 
CC can offer access to Iheart in exchange for barter spots. That could be huge.
 
musiconradio.com said:
CC can offer access to Iheart in exchange for barter spots. That could be huge.
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I read that was the deal with Cumulus. Probably the same for Greater Media. It's temping for those companies that don't plan on launching their own platform.
 
Salty Dog said:
Casey said:
I doubt Iheart will be the main portal. Cumulus was smart to join it for now, to gain promotion, but it would be unwise to use Iheart long-term. Same goes for the other broadcasters. Clear Channel will use it to promote their own content over the competitors.
Click to expand...

I was thinking about what would make competitors willing to go along. Maybe they have an agreement that at some point Clear Channel will spin it off and they can all receive shares.
Click to expand...

I am not sure what would work long term. They are all fine now. But 5 years down the road, Clear Channel will have a major product and Cumulus will have nothing but stations on this platform. Stations that Clear Channel can replace with competing stations. They will almost have to develop their own platform.
 
Casey said:
I am not sure what would work long term. They are all fine now. But 5 years down the road, Clear Channel will have a major product and Cumulus will have nothing but stations on this platform. Stations that Clear Channel can replace with competing stations. They will almost have to develop their own platform.
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If I were running a big radio company, I'd rather own a sizable share of an independent company that owns a consolidated platform than one of a large number of platforms that just works for my stations. That's why spinning it off at some point makes sense to me. It's every company that develops their own platform that doesn't work.
 
Salty Dog said:
Casey said:
I am not sure what would work long term. They are all fine now. But 5 years down the road, Clear Channel will have a major product and Cumulus will have nothing but stations on this platform. Stations that Clear Channel can replace with competing stations. They will almost have to develop their own platform.
Click to expand...

If I were running a big radio company, I'd rather own a sizable share of an independent company that owns a consolidated platform than one of a large number of platforms that just works for my stations. That's why spinning it off at some point makes sense to me. It's every company that develops their own platform that doesn't work.
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I would be highly surprised if that were the arrangement though. I can't see Clear Channel giving up a stake in anything.
 
Casey said:
I would be highly surprised if that were the arrangement though. I can't see Clear Channel giving up a stake in anything.
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I do find it interesting that the FCC and media watchdogs spend so much time holding on to ownership limits for OTA radio and TV, and no one cares how much consolidation is happening in new media platforms like Pandora, IHeartRadio, and Radio.com. As well as Hulu and other video platforms. There will soon be the same number of significant media companies running internet business as there are running TV or radio companies. And no one seems to care.
 
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