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Thread: How can you justify the riches of internet radio?

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  1. #1
    MUSCLE13 is offline
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    How can you justify the riches of internet radio?

    I want to see you justify the riches of internet radio concerning this matter -

    Excerpt -

    This offers the first public look at the company's finances -- and Pandora isn't yet profitable. The popular site posted a net loss of $328,000 on revenue of $90.1 million in the first nine months of its most recent fiscal year. In the fiscal year ended Jan. 31, 2010, it lost $16.8 million on sales of $55.2 million.

    Its biggest expense is the royalties it pays for the music it streams. As Pandora's audience grows, so do those costs, which reached $45.4 million in the first nine months of 2010. That is twice what Pandora spent on them in the same period a year earlier.


    http://money.cnn.com/2011/02/11/tech..._ipo/index.htm

    Now we all know per song royalty rates are going up every year and we also know that they will have to be renegotiated in 2015.

    But besides royalty and streaming costs, if Pandora isn't making money with 80 million registered users how will they make money when everybody and their grandmother is putting out personalized radio apps on smartphones in the next few years including competition from Sirius with 2.0?

    You keep posting that internet radio is where Sirius should concentrate in order to grow its business and make the big bucks, when internet radio hasn't made money ever, even for Pandora with 80 million registered users.

    Thanks.

    PS - I do believe Pandora is strategically IPOing before Sirius XM 2.0 comes out and effects their business negatively.
    Last edited by MUSCLE13; 02-12-2011 at 09:09 AM.

  2. #2
    MUSCLE13 is offline
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    Also found this in the S-1 -

    Our total revenue has grown from $14.3 million in fiscal 2008 to $55.2 million in fiscal 2010 and $90.1 million in the nine months ended October 31, 2010. At the same time, our total cost and expenses have grown from $29.0 million in fiscal 2008 to $70.6 million in fiscal 2010 and $89.3 million in the nine months ended October 31, 2010, principally as a result of the growth in content acquisition expenses. As the volume of music we stream to listeners increases, our content acquisition expense will also increase, regardless of whether we are able to generate more revenue. In addition, we expect to invest heavily in our operations to support anticipated future growth and public company reporting and compliance obligations. As a result of these factors, we expect to continue to incur operating losses on an annual basis through at least the end of fiscal 2012.

    And this -

    Given the royalty structures in effect with respect to content acquisition, our content acquisition costs increase with each additional listener hour. As such, our ability to achieve operating leverage depends on our ability to increase our revenue per hour of streaming through increased advertising sales.

    As our mobile listenership increases, we face new challenges for establishing a robust advertising model optimized for connected devices. The mobile advertising market is nascent and faces technical challenges due to fragmented platforms and lack of standard audience measurement protocols.

    In addition, we expect to increase the number of audio ad campaigns for both traditional computer-based and mobile platforms, placing us in more direct competition with broadcast radio for advertiser spending, and these advertisers predominantly focus on local advertising. By contrast, display advertisers have been predominantly national brands. Our success selling audio ads in large part may require us to convince a substantial base of local advertisers of the benefits of advertising on the Pandora service.


    http://www.sec.gov/Archives/edgar/da...032963/ds1.htm

    Hello commercial laden Pandora...........

  3. #3
    MUSCLE13 is offline
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    I won't take up anymore of your time Spencer. You know how much I have completely disagreed with you on your internet radio thesis because of the standalone free business model. I don't believe it works, and for some reason you love it. I don't know why. In my opinion its a terrible business model. Take care and good luck to you in all you do.
    Last edited by MUSCLE13; 02-12-2011 at 09:38 AM.

  4. #4
    MUSCLE13 is offline
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    I see you posted you must have missed this from the S-1

    In addition, we expect to invest heavily in our operations to support anticipated future growth and public company reporting and compliance obligations. As a result of these factors, we expect to continue to incur operating losses on an annual basis through at least the end of fiscal 2012.

    Our revenue increased rapidly in each of the fiscal years ended January 31, 2007 through January 31, 2010; however, we expect our revenue growth rate to decline in the future as a result of a variety of factors, including increased competition and the maturation of our business, and we cannot assure you that our revenue will continue to grow or will not decline. You should not consider our historical revenue growth or operating expenses as indicative of our future performance. If our revenue growth rate declines or our operating expenses exceed our expectations, our financial performance will be adversely affected. Further, if our future growth and operating performance fail to meet investor or analyst expectations, it could have a materially negative effect on our stock price.

    http://www.sec.gov/Archives/edgar/da...032963/ds1.htm

    You will always love internet radio Spencer. I know that. If Sirius pushes it as hard as you want them to their margins will drop, and their expenses will rise with each additional internet listener. Thus it will kill the stock. It's just a bad bad business model which you still refuse to acknowledge. And I won't change your mind.

    1994 - Internet radio began. 2011 - a million internet radio stations. Still nobody's making money. What a lousy business you love.

  5. #5
    SiriusBuzz is offline
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    If you have a personal question for someone, try shooting them an email or a PM.

    If you want to solicit the thoughts of the entire community, write an title appropriately and ask everyone.

    Thanks.
    Charles LaRocca
    SiriusBuzz Founder

  6. #6
    MUSCLE13 is offline
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    Quote Originally Posted by SiriusBuzz View Post
    If you have a personal question for someone, try shooting them an email or a PM.

    If you want to solicit the thoughts of the entire community, write an title appropriately and ask everyone.

    Thanks.
    Not a problem Charles. The thesis is what I am after. Spencer is not a stupid guy, and even though his love of the internet radio model is beyond anyone I have ever encountered, he has to begin questioning his own thesis now. Pandora's S-1 speaks volumes. Quite honestly I wonder if any writer in the radio industry will push the internet radio business model ever again. Not just Spencer.

    I believe the IPO will be rushed ahead of 2.0. Its only logical.

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