I’m not convinced that podcasts are the lucrative road to ‘in the black’ that Spotify may be anticipating. But, writing for Hackernoon, David Abramovic makes a strong case that there are untapped rewards in the podcasting space. The platform merely needs to innovate:
Unlike other music streaming services, Spotify actually has podcasts and is focusing more and more on them, but they’re still heavily deprioritized. Perhaps not too strange, it is still a music streaming service. However, if Spotify wants to capture this massive, still-growing user base, it needs to figure out how to become an audio streaming service instead.
And because of the the current audio platforms being so flawed, the opportunity to become one is bigger than it will probably ever be. But to achieve this, Spotify needs to fix both the current flaws, and further create the new innovations that’s going to make up the audio platform of the future.
Abramovic suggests improvements to Spotify’s podcast infrastructure that are obvious but unimplemented. For example, playlists for podcasts — it’s such a no-brainer that it’s hard to believe not a single platform has jumped on the idea. Pandora is spending capital on a music genome-like engine for podcasts to aid discovery, but user-generated podcast playlists would be much more effective. Looking for podcasts with Seth Godin as a guest? How about the best podcasts with music marketing advice? Or a selection of inspiring podcasts to listen to first thing in the morning? Playlists!
I’m not sure how seriously Spotify will consider Abramovic’s proposals but, regardless, a service with similar features is inevitable (and can’t arrive soon enough). These ideas go beyond playlists and into treating the podcaster as a creator, with access to data, interactions with fans, and self-marketing opportunities. Perhaps as an ‘audio app,’ Spotify — or any other platform — embracing these improvements would extend more interactive and personalized features to its original creator class: the artists and musicians who built the service.
The Musical Genome, the algorithm behind Pandora, sifts through 450 pieces of information about the sound of a recording. For example, a song might feature the drums as being one of the loudest components of the sound, compared to other features of the recording. That measurement is a piece of data that can be incorporated into the larger model. Pandora uses these data to help listeners find music that is similar in sound to what they have enjoyed in the past.
This approach upends the 20th-century assumptions of genre. For example, a genre such as classic rock can become monolithic and exclusionary. Subjective decisions about what is and isn’t “rock” have historically been sexist and racist.
With Pandora, the sound of a recording becomes much more influential. Genre is only one of 450 pieces of information that’s being used to classify a song, so if it sounds like 75 percent of rock songs, then it likely counts as rock.
Meanwhile, Shazam began as an idea that turned sound into data. The smartphone app takes an acoustic fingerprint of song’s sound to reveal the artist, song title and album title of the recording. When a user holds his phone toward a speaker playing a recording, he quickly learns what he is hearing.
The listening habits of Shazam’s 120 million active users can be viewed in real time, by geographic location. The music industry now can learn how many people, when they heard a particular song, wanted to know the name of the singer and artist. It gives real-time data that can shape decisions about how – and to whom – songs are marketed, using the preferences of the listeners. Derek Thompson, a journalist who has examined data’s affects on the music industry, has suggested that Shazam has shifted the power of deciding hits from the industry to the wisdom of a crowd.
As we’re talking a little about Pandora, I would be remiss to not mention the company’s long-awaited foray into on-demand streaming is launching this week …
The idea of launching a new music subscription service in 2017 would be utterly insane if it weren’t for one detail: Pandora already has 78 million monthly active listeners. If the company has a shot at competing, it will come primarily from its ability to upsell some of these listeners to its new $10 subscription tier. The rollout of Pandora Premium will be iterative and targeted. It begins this week and will continue through mid-April in phases, selectively coaxing existing Pandora users that might be likely to sign up based on their listening activity. People who hit the song-skipping limit or frequently thumb-up songs by the same artist, for instance, are prime targets for the new service.
Pandora is peddling a very polished, well-designed product, but it’s unlikely to reel in many people who are already committed to a service like Spotify or Apple Music. That’s because there’s very little here, aside from aesthetics and a legacy of smart music curation, that can’t be found on other services. Even perks like personalized new releases and the “add similar songs” button found their way into Spotify in the time that’s passed since Pandora acquired Rdio. Unfortunately for Pandora, Spotify has vastly improved its own curation and discovery features over the last year and a half. Pandora Premium is solid, but if you’re already invested in another service, you’re likely to find enough here to
Macworld on what, if anything, sets this service apart from the others:
Pandora Premium offers automated playlist generation: You choose one or two songs and the service creates a full playlist based on their properties. Other services have similar features. Apple’s iTunes Genius, for example, automatically creates playlists from a user’s personal playlist. The advantage for Pandora, however, is that its ability to match songs is widely considered superior to what other services can do {due to the company’s long involvement in the Music Genome Project -ed}.
The company is also very proud of Premium’s search capabilities and even managed to throw some shade at other services when discussing it. “Pandora’s team of curators, music analysts and data scientists have sifted through tens of millions of tracks to help you quickly find what you really want,” Pandora said in its announcement. “No more wading through covers, karaoke versions or tribute tracks to get to your favorite tune.” Spotify’s vast catalog includes numerous karaoke, cover, and tribute tracks that often come up in a search before the song by the original artist.
Update: Jim Dalrymple over at The Loop is optimistic about Pandora’s offering, citing a focus on catering to the listener as the key to making it a potential improvement over other services.
Sources say {SoundCloud} has been trying to raise more than $100 million since last summer, without success. It has also talked to potential acquirers, including Spotify, without closing a deal.
The upshot, according to people familiar with the company: SoundCloud is now at a point where it may sell for less than the $700 million investors thought it was worth a few years ago. One source thinks it will consider bids, as long as they’re above the total investment it has raised to date — about $250 million.
SoundCloud’s struggle is taking place while there’s renewed investor interest in streaming music. Even though the industry’s economics are challenging, users have embraced streaming, and are even willing to pay for it: Spotify, which would like to go public next year, says it has more than 50 million paid subscribers worldwide. Apple Music says it has more than 20 million paid subs. {SoundCloud} says it has 175 million monthly unique users, but it hasn’t updated that number since 2014.
With Pandora experiencing similar woes, it would seem that a tech company wanting to enter the music landscape could make a big splash by acquiring both SoundCloud and Pandora at a good price and combining their users. Maybe one of these will be interested?
Update: SoundCloud forges ahead … this just in from Hypebot:
Beginning today, SoundCloud is inviting DJs and producers who create sets, remixes and other forms of creative works to join its Premier program to earn revenue for the tracks they share on SoundCloud.
Premier creators can monetize their content and earn a portion of the revenue generated by subscriptions and advertising on SoundCloud. Acceptance is still “invite only,” but you can apply here.
SoundCloud has not shared how many artists are Premier members, its criteria for acceptance, or how revenue is shared with creators.
For months now, the US Copyright Royalty Board—a three-person government panel that decides how much online radio services have to pay to play artists’ music—has been mulling a tough decision: Increase music licensing rates for the next five years, or lower them? While artists and record labels pushed for higher fees, webcaster services like market leader Pandora insisted on the opposite.
The CRB {has now} announced those new rates, and they are not exactly in Pandora’s favor. While the royalties cost for streaming songs on a subscription platform has dipped a bit, the cost for streaming songs on the more popular ad-supported free-user platform is now higher.
These fraction-of-a-cent changes may seem negligible, but they amount to millions of dollars a year. Last year, Pandora paid $446 million in music licensing costs alone—roughly half of its $921 million revenue. The increased cost for streaming songs on an ad-supported platform means Pandora will have to dip even further into its revenue stream to pay record labels and artists, in the next few years.
All in all, the rate increase is not as dramatic as it could have been: SoundExchange, the royalty distribution platform that represents artists and record labels, had asked the CRB for a rate of $0.0025. Pandora had asked for $0.0011. The new rate is almost exactly in the middle.
Negotiation 101. Aim high, meet in the middle.
Going back to 1999, the record company would use radio as a way to get fans to discover a new act, then monetize that investment, primarily via selling “on-demand” access in the form of CDs and, finally, drive additional discovery by subsidizing touring (known as “tour support;” a label would underwrite some of the cost of touring to help build an audience to whom to sell CDs). Touring represented a small percentage of artist income.
[Fast forward to 2015:] Over the next few years we will see [the] connection between streaming [i.e. “on-demand” access] and ticket sales become completely explicit. Streaming services will increasingly make it seamless for fans using their services to see when the artist has a local show; Songkick’s existing API partnerships with Deezer, SoundCloud, Spotify and YouTube are hints at what this could look like. It’s not impossible to imagine a time when you could possibly buy tickets directly from your favorite artist right inside your streaming service.
When that happens, artists will finally be able to see a connected picture of how their music is distributed and monetized. An act who gets 100 million streams will see that 10 million of those were monetized via paying subscribers, 90 million by ads and another 5 million fans via ticket purchases. The outcome will be a more seamless experience that results in casual music fans attending more concerts.
The key point across all of this is that the central, most valuable asset of streaming music services will be the listener data they generate. As we shift from offline radio to online streaming, artists will know how those 1 trillion tracks of music were streamed — which fan listened to them, where they were based, which concert tickets they purchased in the past — and be able to tailor personalized and richer experiences to their fans.
The TechCrunch article quoted above was published three days ago. Seems a bit prescient, as the same site revealed this breaking story earlier today:
[Pandora] 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.
“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.
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.
