 RAIN 6/17: Robertson's Pandora projection shows crippling cost of Net radio royalties ·Jun 17, 11:01 AM CLAIMS MUSIC INDUSTRY ROYALTIES WILL NEVER ALLOW PANDORA TO PROFITMichael Robertson, entrepreneur and former CEO of MP3.com, recently forecasted Pandora’s 2010 earnings and costs “using information from Pandora, music royalty rates that all webcasters are obligated to pay, and standard expenses of running a California based technology start-up.” The results aren’t sunny and show how the high cost of Internet radio royalties may be crippling the industry.
Robertson projects Pandora will earn $100 million in 2010 (up from $50 million in 2009) but will run up $102 million in expenses (including sales commissions) — a net loss of around $2 million. The biggest cause, Robertson writes, is performance royalties, which will cost Pandora nearly $50 million in 2010 according to his projection. Pandora paid nearly $30 million in royalties in 2009. “As [Pandora’s] userbase grows their royalties obligations grow proportionally, which is why in spite of doubling their revenue from 2009 to 2010, which is a notable accomplishment for a company with revenue of their size, they are not moving to clear profitability…Pandora must devise a way to lower this royalty amount if they’re to build a long standing profitable company.” Robertson writes (here). RAIN ANALYSIS: Robertson’s numbers may be somewhat off — on our panel at the Radio Ink ConVergence event in San Jose two weeks, ago, Pandora VP/Audio Sales Doug Sterne projected 2010 revenues of $120 million, and Robertson may be double-counting sales salaries — but his point is a valid one: Until the current royalty structure is changed, only the best-managed Internet radio properties even have a chance of being able to eke out a profit. ANDO MEDIA WEBINAR TODAYAndo Media will host
a webinar conference today at 3pm EST to discuss their Webcast Metrics from March and April (released last week, RAIN coverage here). Ando’s new changes, a result of the on-going MRC accreditation process, will also be discussed. You can register for the webinar for free here.
MOBILE NET MAY ENDANGER SAT RADIO, BUT SIRIUS CAN COMPETE IN OTHER WAYS, SAYS MOTLEY ANALYSTAccording to Motley Fool analyst Rick Munarriz, Sirius XM’s biggest threat comes from mobile and in-car Net radio. “These days, all the automakers are trying to get the fanciest dashboard gadgets out there,” he writes, pointing to Ford’s new Pandora-friendly Sync update. He argues people who have already paid for mobile data access, and can then listen to Net radio through that connection, may think twice about paying a Sirius XM subscription.
That said, Munarriz says Sirius XM can survive by offering premium content like Howard Stern, Oprah Winfrey, MLB games and other programming Net radio can’t afford. “Sirius XM has the ability, knowing that they have all this revenue coming in from subscribers, to pay up for content.” Read more at The Motley Fool here.
WUNDERRADIO LAUNCHES ANDROID APPWeather Underground’s Internet radio aggregator app WunderRadio caught our attention back in October 2008 when it launched an app for the iPhone (RAIN coverage here). Now the service has launched an Android app for $6.99. It taps into RadioTime’s guide of thousands of Net radio stations. The company says (here) their iPhone app has been downloaded by 400,000 users. WunderRadio is also available for BlackBerry and Windows Mobile devices.share: del.icio.us.  Reddit  Digg  Yahoo  Wink  Windows  Google  Newsvine 
CommentCommenting is closed for this article.  Other stories RAIN has upgraded (and moved)! RAIN 9/13: RAIN Summit Chicago takes place today! RAIN 9/12: First Summit in RAIN's hometown takes place tomorrow RAIN 9/9: Summer holidays, "doldrums" impact July Webcast Metrics, but audience up over last year RAIN 9/8: Clear Channel launches new customizable iHeartRadio beta; RAIN goes hands-on RAIN 9/7: Meet more speakers you'll hear at RAIN Summit Chicago in less than a week RAIN 9/6: Clear Channel taps The Echo Nest to take on Pandora RAIN 9/2: RAIN reviews Spotify's radio-like product Artist Radio RAIN 9/1: UK online radio aggregator Radioplayer campaigns b'dcasters to create "all radio" ratings RAIN 8/31: Execs from Merlin, Triton Digital, jacAPPS and more to appear at RAIN Summit Chicago |
