Pandora Says Royalty Crisis is Finally Over
After many months of uncertainty and endless questions surrounding the long term viability of the ad supported internet radio model, an agreement has finally been reached.
In an agreement set to run through 2015 Pandora will now see a 40-50% reduction in the per-song-per-listener minimum rates and will now have to pay this new reduced rate, or a 25% kickback based on U.S. income, whichever is greater. Although Pandora CTO Tom Conrad thinks this is “expensive” he is still confident that these rates are workable enough to be profitable next year.
What does this mean for end users of the product? For 10% of the heaviest listeners it will mean that they now have to pay $.99 for any month in which they exceed the newly implemented 40 hour listening limit. This new program is said to be opt-in and typical users will carry on as usual, while the heavy users will have the option to continue on each month.
What can we expect for the future? CEO Tim Westergren says that “Pandora is finally on safe ground with a long-term agreement for survivable royalty rates. This ensures that Pandora will continue streaming music for many years to come!”
There will surely be continued debate on the level of competition between these “free” ad supported internet radio companies and “satellite radio” but, with the release of the Sirius XM iPhone application (which has been downloaded over a million times) and their own premium internet radio offering, the lines are certainly becoming more blurred. What is seemingly not up for debate is the long term viability of the likes of Pandora, but only time will tell.
[Pandora via TechCrunch]
“What is seemingly not up for debate is the long term viability of the likes of Pandora, but only time will tell.”
Still very much up for debate IMHO . . . 25% vig is a pretty big piece of the pie . . . and what happens when free is not really free?
It’s 25% or a 40-50% reduction in the per-song-per-listener minimum rates. Based on the Pandora release it would seem that they are now paying less overall with no big bumps in the road for the next 6 years.
You may question it but the CEO seems confident. I have no reason to trust him any less than Mel.
For an ad based revenue model that is struggling in times like these, any increase in operating costs can be fatal.
I think he had no option but to make the best of a bad situation. What was he going to say. They negotiated the best deal they could. They were not going to get anything better. so now they have to make the model work. I think they will struggle with a business model that offers little more than commodity like services (static music).
Its not an increase. Its a 40-50% decrease.
You think they will struggle but the reality is they are growing at an exponential rate and are ready to turn a profit. As a Sirius XM investor I am more than concerned.
I would not be surprised to see them get some funding or interested parties buying in.
What’s good for the goose is good for the gander. How is Sirius XM impacted by these changes? Positive, negative, or neutral.
I never thought Sirius XM competed with Pandora and Slacker, because the product and services are sooooo different. Pandora and Slacker lack exclusive content and the deep pockets to afford top talent.
if all you want is static music, then these other internet services may be the way to go. My taste is more demanding and I need more than just music.
Sirius has the best content and is growing in to a household name. They are constantly working on improving content for customers and provide quality sound (e.g. recent satellite launch). Okay, the critics feel it will show a moderate improvement but at least it shows a commitment to subscribers, in these tough economic times. Oh and didn’t the CEO just get an extension and pay increase. Hmmm… as the they say ‘HATAS’ yes only time will tell. How does this news compare to any of this, you decide. So way to go Pandora and way to go 1st place belongs to Sirius but hey keep fighting for number 2.
Yeah SIRI LONG.
I listen to Pandora and Slacker and all kinds of internet radio on my Squeezebox Boom. It’s a Logitech product that allows me limitless stations on a radio that sounds as good as my Wave Radio…without the need for a computer. Once you set it up on your wifi, you can spend hours discovering thousands and thousands of radio stations from all over the world. I can’t exaggerate how cool this thing is. I used to have a Sirius radio but once I started moving over to Pandora, Slacker, AOL Radio, I sold my Sirius on eBay. But I also cancelled my newspaper and downgraded cable. So I’m kind of a cheapo. But seriously (no pun intended) why pay for 200 or so channels when I can get 10’s of thousands for free? Yep, I miss some of the DJ’s but I was really there for the music and I can get all those specialty stations (All Springsteen, Dylan, Beatles, Clash, Dylan..I can go on and on…)for free.
Just the opinion of a guy with a lot of mouths to feed. Thanks.
No worries one day I am sure things will get better for you and then you can come back to Sirius. I can understand and respect your standpoint since you appear to have some kind of compassion for Sirius. They are a company that offers a great service for yes a small fee in trade for quality, wide range of content, news, comedy, kids, talk shows, Howard, Bubba and no commercials…
One question LINUS, why do you feel so compelled to come on siriusbuzz to promote Pandora, Slacker and AOL whatever you wanna call it? To state that you can’t afford Sirius. Are you an undercover HATA’? (thats a hater jic)
Hater? Is that like some hip hop lingo? I was just giving my opinion. Do you have to be a pom pom girl for Sirius to come on here? I’m not promoting anything…just giving my experience. I happen to be a fan of radio and technology, that’s why I come to SiriusBuzz. Anyway, I’m not sure if I need things to ‘get better’ for me. Life is very good! Beautiful wife, 5 great kids…nice house in the suburbs. What’s better than that? I happen to have experienced Sat. Radio for 3 years before I gave it up. I have no axe to grind. Yep, I am excited about my new radio and I wanted to share that. I miss not having Sirius in the car but I don’t have a long commute. I couldn’t leave Howard on anyway because of the kids. I liked him better when he couldn’t drop the f bomb every few minutes but whatever. I still miss him. What I miss more is some of the DJ’s on there. Dennis Elsis, Meg Griffon, Carol Miller. They are all great. I always found it weird how Sirius didn’t make it easier to find these classic personalitys. I wonder if Sirius can sustain long term because of the way they distribute their content. Shooting a rocket into space sounds very expensive. I think in a few years there will be an easier way to distribute content…WiMax or something like that. Or something we haven’t yet imagined.
Once the toothpaste is out of the tube, you can’t get it back in there!
You’re right and a bunch of these Sirius cheerleaders don’t have a clue. Prior merger SatRad was great because both companies had to compete for subscribers. And don’t give me that BS about SatRad having to compete with other types of music sources. That’s just a bunch of BS that Mel & Co gave to the FCC and those baby-balled pukes bought it.
Since the merger the content is diluted and the programming quality has taken a turn for the worse and everyone knows that whether they want to admit it or not.
What concerns me is how our own federal government is proving to it’s own citizens that they do not understand the speed at which technology is changing our world. I am still burning over the 18 month delay for the merger due to considerations regarding a monopoly. yeah right… Good Lord…. they are either really stupid or effected by special interest (see the claims of NAB intervention). Either way they continue to prove that me that they are incapable of looking out for me and every other Joe Schmoe
here here js6
sirius is superior and our goverment blows
>>>For 10% of the heaviest listeners it will mean that they now have to pay $.99 for any month in which they exceed the newly implemented 40 hour listening limit.<<<
well, here you go! pandora is no longer truly free….the foot has been wedged into the fee based model door.
only time will tell whether the pandora model will succeed…I do not agree with the author that the debate has ended.
I use pandora on my palm pre because there is no sirius-xm app yet…however, I can’t see paying for pandora if I had sirius-xm available.
There you go??? Pandora was never free. Internet radio has always been ad based or a fee based service.
If the debate hasnt ended than what is it? They continue to grow and have effectively lowered their rates (which was the real issue holding them back) and since they were already set to be profitable, how could this have changed that other than to make them more profitable?
Again, what is up for debate?
>>>and since they were already set to be profitable, how could this have changed that other than to make them more profitable?<<<
what does this mean? have they ever made a profit? siri-xm is already set to be profitable, yet it is bashed for never making a profit, yet when others, such as pandora, who have never made a profit, claim the same thing, all hail pandora, get real, this is a hypocritical analysis. siri-xm has multiple revenue sources (auto, internet, etc.)…pandora one (internet). which is more likely to be profitable? I have put my money on siri-xm…pandora is a fad.
I love being right. As I told you Charles, Pandora and Slacker are implementing the first step towards not free. They didnt even get the death sentence I was hoping for.
How can you be “right” when they have never been free.
Don’t mind relmor2003.
He’s just a cheer leader for Sirius-XM.
dont mind blah blah bloohey. Hes a windbag. And usually wrong.
Hey relmor2003,
I’ve predicted the last two downward shifts correctly.
What exactly have you predicted correctly about SIRI?
Oh wait, that’s right, NOTHING! 😛
js643dp: you are so right! Look how scary dominant Sirius/XM has become since the most scandalous merger approval in history was finally, if reluctantly allowed by our filthy corrupt government. It’s a shame how satellite radio is putting everybody out of business; this monopoly is steamrolling the competition, just like the NAB predicted it would. My God, pretty soon there will be nothing left to listen to except Sirius/XM. I guess they (DOJ/FCC) should have taken another 18 months to deliberate, because rushing their decision like they did has ruined it for the consumer. With satellite radio now being the only choice, these other technologies must be pissed off at the hasty resolution.
At least we now know why it took 18 months to reach a decision regarding the life and death, most imperative, highest priority issue in the history of mergers; our government is a self serving, corrupt institution that caters to special interest groups, powerful corporations, and the thousands of “good ole’ boy” politicians who can be bought and sold at the drop of a hat.
We, the hard working and honest citizens of this country deserve a government that “looks out for us.” I’m afraid hell will freeze over before that ever happens.
How do you figure Sirius XM is a monoplory with less than 5% of the market?
SIRI at 35 cents here we come! 😛
waa waa waa….
40 cents and dropping! 😛
http://finance.aol.com/quotes/.....c/siri/nas
like i said it’s a volatile stock right now and it’s going to go up and down. just not stay down like you’re hoping boo boo. it’s been as low as .06 and as high as .56 in the past 2 months. much more stable than it was and as they continue to generate revenue and meet their outstanding notes, the stock will continue to rebound. the dark days are over. you just missed out on it when you sold for a loss.
Free services can only be free for so long. Once the company makes the transition from free to pay, it will be walking on thin ice. Just look at MySpace as an example of companies that try to generate revenue with free services…
Where does Pandora and Slacker go from here? Their services are static and basically a comodity. Everyone does this. While I think there is room for many services, I think Sirius XM will emerge as the predominant victor. The flexability with both Sat and internet, their exclusive content, and their ability provide other types of services, put them in the #1 spot.
JamesPS:
Sirius/XM may be the furthest thing from a monopoly on this planet; perhaps you missed the sarcasm. You bring up the absurdity of the merger delay by noting that satelitte radio represents only 5% of the market. Thank god our government has our backs and protects us from companies like Sirius/XM killing off all of our radio and mobile device listening alternatives. What a bunch of “A” holes!
sirius doesn’t have to be a monopoly to compete with pandora or companies of the like. those companies aren’t pulling in 2+ billion in revenue per year….they don’t matter.
by the way….terrestrial radio blows.
I still think Sirius should offer a “Slacker/Pandora” option in addition to their great original live content. Especially in lieu of this news. If Sirius did this, they’d have the best of both platforms and make the likes of Slacker and Pandora pointless.
Anyway…changing the subject slighty…did anyone read the great article in Rolling Stone about Goldman Sachs being behind all the market bubbles and crashes since 1920 by Matt Taibbi? He responded to critics of his piece with this follow up:
A MUST read for all Sirius investors to be sure. 🙂
This article exposing GS….along with the recent news about their software(which helped them cheat the market) being stolen has been fun for this Sirius Investor. I only hope they get whats coming to the
Boy-oh-boy . . I really hope no one else hacks into their system. That would be just terrible and very-very illegal . . .
Here we go again. A million and one reasons to drive the stock price down to get the shorts dancing in the streets. I need this stock to start nearing the .65 range. I was almost there once or twice in the past few months. I should have sold and taken the loss and then bought in again on the subsequent drops. Hell, maybe I should sell now. No guts no glory!
I disagree. Sirius has an enormous revenue stream compared to the other offerings for the iPhone and the content is no comparison. Pandora is a non-factor.
and by all means sell for a loss. you know the old saying….a fool and his money….
Hold your position Stu. Whether Sirius has competition or not, its still a grossly undervalued stock. Its working its way back up to $1 per share, and I believe it will continue to go up past $1.
Just think long term, and don’t let “bad” news steer an emotion response out of you.
Thanks,
Im holding and have been for 5 years. I have brought my average from $3+ to .65. It just gets frustrating to watch this stock move up only to be beat down.
Actually, I’m one of the lucky ones, my Siri holdings were down 95% before Liberty stepped in, I’m only down 35% today.
I took a big gamble in December 2007 b/c all the news said that the merger would be approved by the end of 2007. THANKS FCC. I learned my lesson, I hope.
I hope that Boo Boo is spot on with his .35 Good time to buy. I think it jumps to near .50 week before the call, then probably back down. I have no real interest in the short term & do not trade, but interesting to watch. Lots of opportunities for traders.
year ago today this stock was going for $2.00 per share. Stay tuned. The shorts can’t keep this stock down nor can the investors who lost their wad on it like boo boo. Too much cash flow.
Am I the ONLY one who thinks that NOW would be the perfect time for Sirius to announce the launch of a “Slacker/Pandora” like service where people can create their own radio stations in addition to their already great original live content?
Although this “seems” like a better deal for Pandora and it’s ilk…25% is a HUGE chunk especially when they aren’t generating the kind of cash Sirius is. Right now Pandora is on the ropes. This would be the PERFECT time for Sirius to land the death blow. POW!
Seriously, people seem to like the “create your own station” platform. So why not give it to them? Pretty soon Pandora is going to have to start charging people and adding more ads. Now is the time for Sirius to strike. To make it’s presence known to the young kids who seem to download the free Pandora. Sirius already has the best live commercial free content and cross country coverage. Why not add this feature to their service and totally CRUSH Pandora and Slacker. It would take nothing more than a simple update to their itune app software.
Sirius can BEAT Pandora and Slacker at their own game.
Plus people who already enjoy Sirius I am sure would like this feature. Lets say they hear a cool song they like, they can then create a station of that artist to sample other songs….as well as BUY them from itunes. It’d be the PERFECT multi layered solution. Sirius would truly become the dominate Radio service. No one would be able to touch them.
I dunno. Just thinking out loud. I am surprised this isn’t talked about more in the forums and by the other Sirius shareholders more. It’s like the mere thought of being like Pandora is an offense or something. I’m not talking about Pandora being better. Trust me…it ain’t. I am talking about a SMART business move. A move that would ENHANCE the Sirius experience and make it the MUST have radio play out there.
I’d be so excited if they did this. Not only as a Sirius subscriber….but as a shareholder.
Peace out.
This is actually a very good idea.
It’s also the best way increase subs to the main Sirius-XM SatRad service.
Unfortunately, It will never happen.
It makes too much sense.
frigginregan,
I could not agree with you more!!! I love your writting lately so much better then the crap u kept posting when we broke under a $ i.e. 67 CENTS are you friggen kidding me .67 CENTS!!!
We will not beable to offer what your talking about thru the sat spectrum, however thru internet it’s a no brainer as we have all the bandwith we want. I have NO doubt in my mind we will do this, if a company with $24M in REV (Pandora) can do it then we can easily do it. Like you I am SHOCKED that this is not talked about more amoung shareholders!!!!!!!!!!!
I think you are on target Friggin, a lot of poeple have their computers set up to listen to music while they work.. it is just not supplied by Sirius
vaporgold
I know that Sirus XM is in no position to shell out lots of cash, but what about Sirius XM buying Pandora?