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RAIN: 9/17: Columnist suggests Apple or Microsoft could ride to Pandora's rescue

Posted on: 09/17/2008

COLUMNIST SUGGESTS APPLE- OR MS-OWNED FUTURE FOR PANDORA: In a new Popular Mechanics article on the royalty crisis in Internet radio, author Glenn Derene writes, “I’d think that a business as starved for new ideas as the music industry would be clamoring for a way to make Pandora work profitably, not starving it out of existence in its nascence. I can’t help wondering if large technology companies such as Apple and Microsoft could ride to the rescue and simply buy Pandora up and make it work within their music systems.”

Both Apple and Microsoft have recently unveiled Pandora-like recommendation functions for their music services (Genius for Apple’s iTunes, and the new Zune subscriber update from Microsoft), but neither have worked in that area as long as Pandora. Both companies could more easily afford royalties because of both their greater assets and because (at least in the case of Genius) the system works with music the listener owns, thus no performance royalty is incurred.

Derene talked to SoundExchange spokesperson Richard Ades, who blamed Pandora for its own plight. “What is Pandora doing to raise revenue? They’re attracting listeners with the music, but they’re not requiring listeners to pay for the music. Pandora’s failure to monetize their business is why they can’t afford the rates.” Read the full Popular Mechanics article here.

STUDY: LOCAL RADIO WEBSITES HAVESTRONG POTENTIAL FOR GROWTH: A new study by BIAfn in conjunction with Borrell Associates, finds that radio and TV websites have “strong potential,” for rapid growth in the near future. The study valued radio websites at $15 million-$20 million. “Given their growth potential, the value multiples of media Web sites may be two to four times that of the core business,” said BIAfn VP Mark Fratrik. For more, read R&R’s coverage here.

FONESHOW CEO: RADIO HAS A 3-YEAR WINDOW TO EMBRACE THE FUTURE: Foneshow CEO Erik Schwartz accuses radio of being in denial about its future and failing to understand how the way consumers use media is fundamentally changing, and estimates that radio has just 36 months to get its act together. His suggestion, like those of so many others, is that radio needs to embrace the new methods of distribution afforded by technology. Schwartz wrote in his Foneshow blog, on the eve of the fall NAB gathering in Austin, “Fundamentally, the distribution channel must change from a centrally-controlled broadcast model to a narrowcast model, where the consumer has more control. Radio can embrace new technologies… Music radio can’t just be music; iPods do that just fine. Music radio will need personality. They’re in the audio content business — it should not matter how that audio is distributed.” Read his blog here. Foneshow offers a service that delivers radio-style audio programming to wireless phones.

SERVICE ALLOWS INTERACTIVITY WITH AM/FM CONTENT VIA CELLPHONES: A company called StratosAudio says its services enables “listeners to respond to AM/FM broadcasts using select mobile phones… Users can respond in real-time to ads, watch live video related to ads and content, vote, engage in contests and polls, buy ringtones and select songs for purchase.” In a press release, StratosAudio president and CEO Kelly Christensen commented, “Radio advertising has not remained competitive with other technological offerings and sales reflect that. Our service is designed to make radio advertising effective and accountable.” The company will roll out an ad campaign called “Do I have the phone?” to pool consumers that already have Stratos Interactive capable handsets. Read the press release here.

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  1. Surely listeners would soon drop if pandora started charging them it was always meant to be free to the listener. It is the business model of the music industry that needs to change not Pandora’s.

    mike allen · Sep 17, 09:48 AM · #

  2. If we are talking about underlying “technology”, there is no reason Apple/MS would want to buy Pandora. Pandora hand classifies songs into a large number of sonic features. The total catalog of songs they have classified is small (certainly under <1M, maybe as little as 100-200k). Their system works fine for a closed-universe radio application. However, it cannot scale to the universe of songs available on a subscription service (Napster, ZUNE, Terra, etc.), a store (iTunes) and certainly not the wild-universe of users’ local libraries. In addition, a full-scale music recommendation/personalization experience will need more than just sonic connections. The type of recommendation you make in a passive listening environment is different from a store-based recommendation or the type of recommendation required in a mobile environment.

    Michael Papish · Sep 18, 04:10 AM · #

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