Internet Radio Round-Up – Pandora, Spotify, MOG, QTrax, Limewire, Beyond Oblivion and More
Internet radio is here to stay. Whether or not Sirius XM investors like it, these are the facts. The Net neutrality issue, cell phone data plans, and even royalties will not kill internet radio. Internet radio will remain a force because consumers want it, the record labels want it, and because there are always services, companies and investors that feel they can deliver a better product than what exists today.
The smartest thing a Sirius XM investor can do is understand that the audio entertainment landscape will get more crowded. The smartest thing Sirius XM can do is to understand what consumers want and be the best at delivering a product that will fulfill those consumer desires. Articles here covering this issue are met with mixed reviews. Some people hate the fact that this site gives this information, while others appreciate the depth at which we try to present information that is relevant to an investment into Sirius XM.
There has been a lot of news in the Internet radio sector lately. Spotify raised $100 million in preparation for a potential U.S. launch, Clear channel acquired Thumbplay, Rhapsody announced a 60 day free trial, Pandora announced that they are going public as well as their largest yet ad campaign contract, and Kazaa announced a new strategy to avoid Apples revenue sharing fees. It seems that every day there is more news in this sector. Simply stated, it is a hot topic.
Internet radio News this week includes:
Spotify Passes 1 Million Subscribers
While not yet launched in the United States, this Internet radio provider has already passed 1 million PAYING subscribers. Spotify. The company boasts over 10 million registered users. Early in December the company had announced 750,000 paying subscribers. This translates to 250,000 additional paying subscriptions in less than three months. That is an addition rate that rivals Sirius XM. Spotify is getting ready to launch their service in the United States.
MOG Enters Living Room and Automobile
SiriusBuzz profiled MOG shortly after the company won an award for having the best music streaming app on the market. Until now MOG was a smart phone and computer based service. During the past week the company announced a deal with LG Electronics that brings the service to televisions and Blu-Ray players. They are also close to similar deals with Samsung and Vizio. These deals will get MOG into living rooms a-la the Pandora model.
In addition MOG announced a deal that will bring their app to the MINI line of cars. The app will allow streaming of MOG content through MINI’s touch screen display. This news is coupled with an announced deal with Visteon, a stereo supplier to several manufacturers.
QTrax Launches Internet Radio Service
QTrax is making a second attempt at the Internet Radio business after a failed attempt two years ago. In debt to the record companies, QTrax has revamped their business model and will initially launch in Canada, Hong Kong, Australia, New Zealand and Fiji, with expansion to a total of 30 countries in their plans. It is unknown when they plan a U.S. launch.
QTrax users have watch advertisements prior to downloading a track. Any tracks downloaded via the service must be played in a dedicated Qtrax player that also displays ads during playback. This business model guarantees ad impressions, but the burning question is whether consumers will be patient enough to wait.
LimeWire Comes To Settlement With Music Publishers
Limewire got themselves into hot water late in 2010. The Peer-To-Peer company was virtually shut down by record label lawsuits. It was announced this week that a settlement has been reached with music publishers. According to a document filed yesterday to the court overseeing the case, a group of publishers settled with LimeWire for an undisclosed sum last Friday. The move means all claims from the publishers involved in the suit against both Lime Wire and individually against founder Mark Gordon are dismissed. Both sides will pay their own attorney’s fees.
The litigation with the record labels is still pending. Labels are seeking hundreds of millions from LimeWire. Consumers should not look for LimeWire to carry a renewed presence any time soon.
Beyond Oblivion get $77 Million In Funding
The virtually unknown Internet Radio provider Beyond Oblivion announced that they have secured $77 million in funding as they ready the launch of their service. This new cash infusion comes from Welcome Trust, a global charitable foundation. The company already has had investments from News Corp., Allen & Company and Intertrust Technologies.
Beyond Oblivion, based in New York, stated that funding will be used to secure content licenses, build a global infrastructure and market its commercial launch. The company will launch in Indonesia and Malaysia. Expansion to other markets has not yet been announced.
The company intends to employ an interesting strategy. The company states, “Beyond Oblivion enables high-quality music files to be downloaded and played from a vast cloud-based library and shared freely between licensed devices such as music players, mobile phones, computers and pads. Acknowledging that the value of a digital music file is in how many times it is played and not the initial download, Beyond reports play-count to rights holders who are paid a royalty every time their music is played – whether or not the file was legally or illegally downloaded, ripped or shared.”
Consumers need not look for Beyond Oblivion. It will come to them. Beyond Oblivion’s business model is different. They sell their service to hardware manufacturers. So, for example, an MP3 player could come with the Beyond Oblivion music service with the price baked right into the cost of the device. The license allows users to share music with other Beyond Oblivion devices.
What we can see is that there is a lot happening in audio entertainment. You can choose to ignore it, but that would be at your own peril. Bottom line is that it is prudent to keep tabs on what is happening. Especially if you are invested in the sector.
Position – Long Sirius XM Radio
None of these are radio, they are music jukeboxes and personalized collections and can not compete directly with Sirius on a subscription model. They are all competing against terrestrial radio & themselves with Ad based models. This reminds me of the .com bubble. Your lucky if you see 1 or 2 players around in a few years, while Sirius continues to add subs, revenue and have massive cash generation.
Whether you personally consider them radio or not matters little. They are audio entertainment.
What makes these “jukeboxes” and not Sirius XM? A song is a song no matter what it is played on.
What about the move toward commercial free that these services are doing?
Sirius XM is not void of advertising. Only the music channels are commercial free.
Just being devils advocate.
Sirius outside of music:
MLB, NFL, NBA, NHL, PGA, Nascar
Howard Stern, Opie & Anthony, Oprah, Martha Stewart, Dr Laura, Rosie, Mad Dog, Ferrel to name a few personalities.
Bloomberg, Fox, CNBC
Should I go on and on…
All those companies are garbage compared to Sirius and the value you get from overall package…hands down.
And Sirius is evolving to touch on some of the personalization and other functioanlity with 2.0 that will make all these companies above meaningless.
Did you also forget about Navigation, weather, Nav-traffic, video and other 2.0 features that are coming along that tie into their GPS capability (parking, cameras, gas stations & prices, etc)
Those above are all music juke boxes and you are way to excited about them and they virtually all have no business plan and way to make any $ to survive.
Sirius stock price is doing the talking in the last 2 years and is not nearly valued properly still, while all those make believe companies you listed above bleed cash profusely in coming year or two until they go away.
The non-music content on Sirius XM is great. It is one of the advantages the company has over their competitors. What value is all of that worth per month? Is it worth $20 per month? With ARPU at $11, it would seem that a lot of consumers forgo the Best of package and the Internet feed.
Navigation….I get it for free on my Android, and have it built into my car stereo system. i have never paid for Sirius XM navigation, and never will. Why would I pay for something that i already get elwhere?
My smart phone provides me anything I want in terms of weather , gas prices, etc. If Sirius XM offers that free it is great. We shall see.
You bare saying they have no way to make money, but they already are making money. They are here and will stay here. they have capabilities that resonate with consumers that Sirius XM simply does not yet offer. Those are the facts.
If you think Internet radio will go away you are delusional.
You are quite correct. Siri is so much more than “audio entertainment”. It is RADIO in the best sense of the word. Due to siri, we are witnessing rebirth of radio of much higher quality and phenomenal choice. There will be just a few “audio entertainment” companies left, if any, when the bubble explodes. And it certainly will… We have been there and we have seen that before. Comparing these companies to siri is insulting from any point of view, be it revenue (where all of them put together cannot even scratch siri’s numbers) or content. I am not trying to say that siri could not learn one or two tricks from them. It never hurts to learn. Spencer is trying to be too much of a devil’s advocate (with apostrophe) instead of seeing facts the way they are. And the facts are such that siri is plugging along while these companies are scrambling before they fall… hard.
Is this the radio bubble? There aren’t enough ad dollars to support this many companies.
But you are right, Spencer. SiriusXM better have their A game going to get through this survival of the fitest.
You have been a critic, along with others of SiriusXM music. I now have to chime in on that.
Before the merger, I had friends who subscribed to both Sirius and XM. Unanimously, they said XM’s music was better. So, I took an XM internet sub. and came to agree with them.
Now, it appears all of the XM people, like Bob Moke who was involved with the 40s and 50s channels, are gone.
Consequently, I find the music less eclectic.
Mel is the one who created the mantra “content is King” Well, the music isn’t King and that had better change.
Gen Alexander Haig once said about battle, “The worst thing you can do is to do something poorly.” That is something the management of SiriusXM should make note of because the battle for ears is on!
Spencer, I was curious what you thought about Bob Pittman of Clear Channel on CNBC last week when he commented that he wasn’t sure you could make money on these services.He didn’t know if they were a free standing business. Sounds like everyone’s trying to make something stick to the wall. I want sirius/xm to provide a custom play-list service but I am glad they already have content first. I hear tivo is great but it is not t.v. On the other hand, how long before these services have enough money to sign deals with a NFL,CNN, FOX etc…
Whether or not these services can make money is an issue that is being considered by many, including these companies themselves. It could be that music listening becomes a loss leader while companies make money in other ways.
What is obvious is that there are many who feel they have a better way to skin the proverbial cat. Interestingly, in terms of consumer experience, some of these companies are correct. The question is whether or not they get traction.
This will be an interesting year
Don’t hold your breath waiting for that answer on Bob Pittman . . Spencer will not address it because it doesn’t fit his thesis . .
the same way he touts Pandora’s # of “Registered Users” and monthly revenue but never provides an ARPU calculation;
the same way he fails to mention that Pandora has never posted full-year profitability;
the same way he fails to mention that 86% of Pandora’s revenue is derived from advertising;
the same way he fails to mention that TSL (Time Spent Listening) has continued to decline as smartphone penetration has increased;
the same way he fails to mention that Pandora’s auditing process has material defects;
the same way he fails to distinguish between curated music and a playlist service.
Today’s article merely highlights the limitless barriers to entry and the fragmentation within the sector . . but hey, why let a few inconvenient facts get in the way of a good story!
http://www.cnbc.com/id/4185244.....7?par=RSS
Roadkill….
You state, “Don’t hold your breath waiting for that answer on Bob Pittman . . Spencer will not address it because it doesn’t fit his thesis . .”
I have addressed it and replied. These companies have interesting ideas about how to make money from Internet radio. As an investor in sirius XM, you better hope that money can be made on the Internet feed because Sirius XM is in that business too. If it was soo terrible, then Sirius XM should cut off the Internet feed altogether.
You say, “the same way he touts Pandora’s # of “Registered Users” and monthly revenue but never provides an ARPU calculation;”
I have addressed this. Pandora has a wonderful list of contact information to utilize from all of those registered users. Their ARPU…..Quite easy…..about $1.00 per registered user. The subscriber ARPU is substantially higher.
You say, “the same way he fails to mention that Pandora has never posted full-year profitability;”
Neither has Sirius XM if you look closely. Pandora is well on their way to it though.
You say, “the same way he fails to mention that 86% of Pandora’s revenue is derived from advertising;”
And up until last year it was 100%. This issue has been addressed. They are heavily promoting their subscription tier because that will help lead them to a better royalty rate.
You say, “the same way he fails to mention that TSL (Time Spent Listening) has continued to decline as smartphone penetration has increased;”
That issue goes across the board. It impacts terrestrial, satellite as well as Internet. With some of these services they have no way to gage TSL because you cached the station. Please, don’t let little facts like that get in the way though.
You Say, “the same way he fails to mention that Pandora’s auditing process has material defects;”
As has Sirius XM’s in the past. It could be argued that it still does.
You say, “the same way he fails to distinguish between curated music and a playlist service.”
They differ, but in the end they need to deliver what a consumer wants. Customized channels are indeed curated….another fact that you should not let get in the way.
If you want to believe the IDIOTS out there that have called Internet Radio’s death time and time again, feel free. Those that say that are delusional IDIOTS. Plain and simple
ok, let me see if I have this right . . because I do not want to misquote you . .
In a nutshell, your rebuttal to my post is as follows:
1.)
“Interesting ideas” equal profitability as a standalone enterprise;
2.)
ARPU should only be calculated based on subscribers;
3.)
Sirius XM has never had a full year of profitability despite public disclosure to the contrary;
4.)
Pandora is well on their way to profitability despite IPO disclosures to the contrary;
5.)
Pandora is heavily promoting their subscription tier . . despite the fact that last week it was reported that they are unlikely to give up their lucrative advertising platform anytime soon;
6.)
The interpretation of TSL is the same for an advertising model as it is for a subscription model;
7.)
Sirius XM has undergone an independent review which has found material defects in their auditing process and;
8.)
A customized channel that I have self-curated becomes an after-the-fact curated channel.
Do I have that right Charlie Sheen?
You say, “ok, let me see if I have this right . . because I do not want to misquote you . .”
Yet you are misquoting me. What you are offering up is your own poaraphrasing of what I said…not quotes..
In a nutshell, your rebuttal to my post is as follows:
1.)
“Interesting ideas” equal profitability as a standalone enterprise;
Why does a standalone need to make money? If that is the case, pull the 40’s channel, the $50’s channel, and dozens of others from the service because simply stated they are loss leaders. The business as a whole needs to make money.
2.)
ARPU should only be calculated based on subscribers;
ARPU is not a gaap metric. It can be defined in any way a company wants. Sirius and XM both fiddled with ARPU for a long time.
3.)
Sirius XM has never had a full year of profitability despite public disclosure to the contrary;
I stated that if you ;look closely they did not get to profitability. They reported a positive number, but expenses paid out in Q1 would have wiped that out. Technically they made money, but reality is that as yet they don’t have a “profitable” model. They are darn close though.
4.)
Pandora is well on their way to profitability despite IPO disclosures to the contrary;
IPO disclosures paint the worst case. they have to. Have you ever seen Sirius XM’s disclosures? Don’t be an idiot and try to walk down this path. Otherwise you would state that Sirius XM stated time and time again that they may not be profitable.
5.)
Pandora is heavily promoting their subscription tier . . despite the fact that last week it was reported that they are unlikely to give up their lucrative advertising platform anytime soon;
They are not going to give up their advertising. No-One said they would. What they are doing is trying to maximize revenue through subscriptions so that they can get the royalty rate down to 25% of revenue rather than the more expensive plan they are currently on. Again, this is plain to see IF you don’t have your head in the sand.
6.)
The interpretation of TSL is the same for an advertising model as it is for a subscription model;
Time spent listening is a relative thing. Should sirius Xm count promotional subscribers for which they do not receive revenue in their TSL category?
7.)
Sirius XM has undergone an independent review which has found material defects in their auditing process and;
Sirius XM has had material defects in audit review. Why do you think the way they each counted subscribers was adjusted?
8.)
A customized channel that I have self-curated becomes an after-the-fact curated channel.
A curated channel means that someone else created the listening experience for you. If you create your own listening experience this would be a playlist created by you. Internet radio has a randomness to what plays next. The experience is created for you.
Do I have that right Charlie Sheen?
I am not Charlie Sheen…..Cheers
Spencer,
You do understand that the quality over smartphones via bluetooth, whether it be cell or wifi is not very good and just like people never wanted to fiddle with all the wires and mounts in cars for sat radio, this is more reason I’m not worried one bit in the car.
Sirius has a 62% penetration rate in cars and that is not much higher because they want to keep it in the 65% or so range based on models that are not likley candidates to convert to a paying sub.
Sirius XM are radio companies are will continue to keep pulling subs from a dying terrestrial audience, just as these internet ad based companies will do to an extent if they stay in business.
Sirius XM has the perch and these companies are like annoying gnats or flies that they will swat away one by one if they don’t kill eachother first.
Should I attach Sirius or XM’s content lineup from their website to remind you ?
The audio quality over bluetooth is just fine? I do not know where you are getting your assumption from. Digital is digital. You either receive it or you dont. Bluetooth can handle audio quality that exceeds what Sirius XM is giving you. Bluetooth A2DP does just fine. I use it myself to stream to my car stereo.
I understand that you love Sirius XM. I do as well. I simply will not settle for anything less than what I want. Sirius XM does not always deliver what I want. If I want toi hear Black Eyed peas RIGHT NOW, Sirius XM can not deliver. Others can. That means others are doing better for me at times than Sirius XM can.
You can post a content lineup if you desire. I think we BOTH KNOW that I am well aware of what content is on the channels.
Let’s be frank….Cosmo radio is not something I listen to. I have not listened to NHL or NBA radio in I don’t know how long. I catch Mad Dog about once every three months. Having all of this content is great, but the average listener probably only uses 6 channels or so. The company needs all of the content to appeal to a wider range of people, but lets not pretend that everyone is listening to everything.
I happen to believe that the Internet will become more and more capable as time passes. i happen to believe that consumer demand will dictate the marketplace. I happen to think that those that say these services will die are blowing smoke up your ass. They will exist because there is consumer demand. period….end of story
there is demand because they are FREE and this will not continue and then we will see.
Can Sirius 2.0 blow the Android OS into oblivion?????????????????????????????? Android is making its way into cars and developers will produce all sorts of apps such as facebook, youtube, twitter, email, traffic, etc.
Sirius charges extra for travellink etc…..
Just to reiterate Frear’s comments from this week. Pandora has been shifting towards a more ad based model…….so really they are moving towards terrestrial radio. We’ve been competing against terrestrial since we started and we feel pretty good about competeting against it.
I have no problem spencer with you “keeping people in the loop about what competitors of sxm are doing” but you’re site is getting to the point where you should change the name. It appears obvious these articles are getting you some site action and is why you keep putting them out but the majority of the facts are that these businesses aren’t going to be big hinderences for sxm going forward.
I have seen you very little meaningful articles ACTUALLY ABOUT SXM in quite some time. Literally nothing about what Sxm has been doing.
These articles get the same traffic as usual. I am covering this because it is where the news is at right now.
I covered March auto sales only a week ago, charlie sheen, etc.
Spencer you make a convincing argument,unfortunately it’s against Sirius/xm. I guess I need to sell my Sirius/xm stock and wait for the Pandora ipo. I mean the way you defend Pandora,Slacker and the gang it’s beatiful. I thought Sirius/xm was in trouble when it was under a dime, but reading your enthusiasm for the competition it’s clear no more Sirius Buzz.
Let us not forget that Sirius XM is NOT an “audio entertainment” business but rather a RADIO. We keep mixing apples and oranges. If siri were just about music, it could (but not necessarily would) be having a few problems fighting the plethora of pandoras. Let us not forget that siri in principle targets a different segment of customers. In my view, these are mostly educated people who would hate to tinker with pandora-like services. These folks (and I am one of them) would prefer a convenient service against spending hours on end setting up still deficient pandora-like programming services, let alone the absence of a zillion of non-music channels. There are tens of millions of kids, juveniles and young adults who simply CANNOT afford siri subscription because they have no discretionary spending budget. There are also millions of scrooges who would NEVER buy any service even at a gun point and would perennially opt for anything that smells free. Why in the world would siri spend a penny of its marketing dollars and effort on those types of folks? These are pandoras’ Customers, and you may stand on your head… and they would still never pay for anything if they have a “free” option. When folks say that siri has 20M subs, I would correct them by saying that siri has 20M+ subscriptions but NOT subs. Some (and I am one of them) have two, three, four and even five subscriptions at the same time. The true question is how big siri’s potential market is. I believe that they can get to as many as 100M subscriptions (not subs) once the brand becomes solid. There is a lot of room to tap in the businesses market, rural market where people have unreliable internet services, certainly used car market, and of course it would be very interesting to see the impact of Sat radio 2.0 first on the retail market and then on OEM. I do not believe that siri has any credible competition in the auto and any other type of vehicles. This is where their 100% focus is, and this is where real dollars are coming from, and this where they shoud be for now. At the moment, Mel and Co. treat internet as an auxiliary add-on service to their auto market. I hope that this will change with time and sat radio 2.0 is one of the first steps in this direction.