Slides for a webinar I gave on June 27, 2013 covering the state of webcasting, digital music, and online marketing, with a focus on Pandora and the potential threats presented by Apple's iTunes Radio service. Featuring a significant amount of digital music industry economic data, and mapping out the value chains for digital music distribution.
[2024]Digital Global Overview Report 2024 Meltwater.pdf
The State of Webradio: Pandora vs. Apple
1. Pandora, Apple, &
The State of Web Radio
Dr. Aram Sinnreich
Assistant Professor
Rutgers University SC&I
June 27, 2013
2. Introduction
Aram Sinnreich, Ph.D.
Currently:
• Assistant Professor, Rutgers University SC&I
• Analyst, GigaOM Pro
• Author of 2 books:
• Mashed Up (2010)
• The Piracy Crusade (2013)
Previously:
• Co-Founder, Managing Partner, Radar Research
• Director, OMD Ignition Factory
• Visiting Professor, NYU Media & Culture
• Journalist, Wired, MediaPost, Billboard, NY Times
• Senior Analyst, Jupiter Research
19. Here Comes the Gorilla
SERVICE
• Fall 2013 launch in US
• Available on all Apple devices
and via iTunes on Windows
• 200 stations + personalization
• Siri integration
• Free, ad-supported
• Ad-free integration with
iTunes Match for $25/year
• Deep integration w. retail via
“buy” button & w. iAd
• Integrated label promotion?
BUSINESS
• Publisher licensing:
• 10% of revenues (2.5x Pandora)
“introductory rate”
• Major labels – greater of:
• 50% of net ad revs, OR
• $0.00125-$0.0016/stream
(not paying for skips?)
• “Substantial” advance
• Indie labels:
• 15-19% of net ad revs, AND (?!?)
• $0.0013-$0.0014/stream
• Leveraging iTunes store to
compel participation
20. Pandora: Strategic Position
STRENGTHS
• Webcasting market leader
• Market-defining brand
• Proprietary technology
• Large x-platform install base
• Predictable cost base
• Enough cash for 5 years
WEAKNESSES
• Consistent red ink (content costs)
• Small library, non-interactive
• Over-reliance on advertising
• Near market saturation in US
• No cross-channel power (except
in S. Dakota)
OPPORTUNITIES
• Recently announced in 100 car
models, 2.5M+ activations
• Growing subscription service
• Increasing sales team; expand
mobile advertising model
• License Music Genome engine
• Develop partnerships with
existing cross-media brands
THREATS
• Increasing competition from all
three sides: Spotify, CC, Apple
• Tension w. artists leadings to bad
PR and possible defections
• Fickle consumers, rapidly evolving
mobile market
• Mobile bandwidth not priced for
heavy streaming
21. Apple: Strategic Position
STRENGTHS
• World’s largest music
retailer, with 75% digital & 31%
overall
• 575M iTunes users in 120+
countries, 600M iOS
devices, 300M iCloud users
• Competitive pricing
• More than enough cash to wait
out competition
• Gizmodo: “better than” Pandora
WEAKNESSES
• iOS market share < Android
• No access to Pandora’s 100M+
Android users
• More expensive pub licensing
• Revenue share could prove pricey
• Late entry in saturated market
• Limited success with streaming
and social media in the past
OPPORTUNITIES
• iAd netwk/exchange integration:
possible RTB play?
• iTunes Store integration
• In-app major label music
promotion (don’t say “payola”)
• Not bound to DMCA
THREATS
• Market power still contingent on
post-Steve Jobs device innovation
• Spotify & others undermining
Apple’s source of leverage
• Must demonstrate that service is
additive, not cannibalistic
• Shrinking revenue-per-user
22. Additional Pandora Competitors
Launched:
• Europe: February, 2009
• US: July, 2011
Users:
• 25-30M active
• 6-7M paid
• 28 countries
Strategic:
• Ford/Volvo deals
• #2 source of $ for labels after iTunes
• Released free streaming radio in
2012
• Expanding radio overseas in 2013
Launched:
• April, 2008
• Relaunched July, 2011
• Owned by Clear Channel
Users:
• 33M registered
• 60M monthly uniques
Strategic:
• Chrysler/GM/Toyota deals
• Broadcast/outdoor/event synergies
• “Perfect for” feature like Songza
• “Add-ins” provide local news, traffic
and weather from CC stations
• Revshare deals with Big
Machine, Glassnote, Fleetwood Mac
25. Digital Music Drivers and Inhibitors
Consumer
market
confusion
DRIVERS
INHIBITORS
Music
licensing
challenges
Wireless
data
limitations
Social
integration
Hardware
integration
(auto & IPTV)
Cloud
adoption
Global
market
maturation
Global
competition
Mobile
ad
growth