Seeking Alpha

It looks like Pandora (P) is taking a backdoor approach to lowering the performance royalties it...

It looks like Pandora (P) is taking a backdoor approach to lowering the performance royalties it pays to trade association ASCAP. The Web radio leader has bought a tiny Rapid City, SD radio station, a move that could allow it to pay the lower fees granted to broadcast station owners. However, while content acquisition costs equaled 69% of Pandora's FY13 revenue, performance royalties to ASCAP and others only made up 4.3%. Recording royalties paid to SoundExchange are a much bigger expense. Pandora sued ASCAP over its rates last November.
Comments (4)
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    Idiotic hail mary. Anyone familiar with legal/regulatory environment understands this is an empty protest gesture directed at a tiny portion of P's content cost structure. P seems to think they are entitled to government intervention to save their business. They should focus on obtaining direct licensing deals and compete against market-based solutions like iTunes Radio, rather than searching for legal gimmicks and licensing loopholes.
    12 Jun 2013, 01:06 AM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    See Tim Westergren’s Mask Is Slipping: http://bit.ly/11zbsRz
    12 Jun 2013, 11:10 AM Reply Like
  • Hokie91
    , contributor
    Comments (14) | Send Message
     
    Digitialmediaview - Thats a funny comment. Pandora deliberately did not do direct deals with the labels years ago. Smart move because direct deals with content providers never work - look at hulu and spotify. Two businesses with deep problems. The rate structures will eventually come into line (satellite, radio, internet radio), thats just a matter of time. Also, Pandora is building a data platform that happens to be based on music... its the value of the platform they are after, not some short term profits.
    12 Jun 2013, 10:43 AM Reply Like
  • DIgitalMediaView
    , contributor
    Comments (668) | Send Message
     
    Where to start? Relying on the government for your business model is a smart move...right, so that's why P has never been profitable and is limited to the US (with one exception that proves the rule society deal in AUS/NZ). Direct deals with content providers never work...right, like it never worked for Apple, which increased its market cap 100x since launching iTunes a decade ago (not to mention Amazon, with a thriving digital music business and exs in other digital entertainment categories like games, books, video etc). Rate structures will eventually come into line...yes digital rates may (sat's costly distribution model makes it exceptional, and terrestrial radio's model has become entrenched after almost a century) which means the precedent set by the AAPL deal will likely exert a great deal of influence in rate resetting and lead to a 50-100% increase in P's statutory rates. Your last point about P having some secret agenda around building a data platform that has value independent of music makes no sense because the only data they have is based on musicological analysis and music consumption.
    12 Jun 2013, 11:07 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|