Jul. 23, 2014, 9:10 PM| Comment!
Jul. 23, 2014, 5:35 PM
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Jul. 14, 2014, 4:59 PM
- The DOJ has sent out document requests to music publishers Sony/ATV and Universal, as well as trade groups ASCAP and BMI, regarding the consent decrees through which they provide performance rights to Pandora (NYSE:P) and others.
- The agency is investigating allegations of "coordination" between the publishers and trade groups to secure higher royalties. The probe comes after Pandora alleged during a 2013 rate-setting trial (previous) the parties colluded to change ASCAP/BMI by-laws that would allow for partial rights withdrawals, a move that paves the way for higher royalties.
- During the trial, Judge Denise Cote found proof of "troubling coordination" between ASCAP, Sony, and Universal, but had no jurisdiction on the matter to make a ruling.
- Content acquisition costs accounted for 56% of Pandora's Q1 revenue, with recording royalties (different from performance royalties) making up the biggest portion of the total. Q2 results are due on July 24.
Jul. 8, 2014, 12:45 PM
- Echoes of April: Following a big May/June rally that propelled the Nasdaq to new post-Dot.com bubble highs, momentum stocks are nosediving nearly across the board today.
- The selloff comes ahead of Alcoa's afternoon Q2 report, the unofficial start of earnings season. Some of the cash going out of equities is flowing into Treasurys.
- Notable 6%+ decliners: TWTR -7.6%. DDD -6.5%. SSYS -7.9%. P -7.7%. LNKD -7.1%. DATA -10.1%. SPLK -9.3%. WDAY -7.7%. YELP -8.3%. GOGO -6.5%. YOKU -6.6%. ZU -10.5%. NOW -6.8%.
Jul. 1, 2014, 4:15 PM
- Google (GOOG +1.3%) says it will "explore ways" to integrate Songza, whose Android/iOS apps (5.5M MAUs) deliver human-curated music stations based on mood and activity, with Google Play Music. "We view the Songza acquisition as a way to further enhance our radio feature by adding their expertise on context."
- The Web giant adds it will also look at ways to use Songza's curation/music recommendation expertise within YouTube and other products. Google has already announced plans to launch a YouTube music subscription service later this summer.
- No purchase price is given for the deal. The NY Post previously reported Google had offered $15M.
- Pandora (P), which currently has 77M active users to Songza's 5.5M, is down 2.1% AH.
- Update: The NYT reports Google paid more than $39M for Songza.
Jun. 24, 2014, 12:39 PM
- A talk with Pandora's (P +3.4%) IR team has given Canaccord's Michael Graham (Buy, $43 PT) "renewed confidence in Pandora’s ability to exceed [Canaccord's] revenue targets over time, especially when viewed through the lens of future local sales capacity."
- Pandora has been spending heavily to grow its local ad salesforce: Sales/marketing spend rose 63% Y/Y in Q1 to $61.8M.
- Meanwhile, MKM's Rob Sanderson (Buy) believes Pandora could see $5.60/year in EPS one day with the help of rising ad load. He observes that while Pandora has a 9% share of ad-supported radio listening, its audio ad sales "represented less than 2% share of the spending pie last year."
- Pandora's 2014 and 2015 EPS consensus estimates are only at $0.17 and $0.48, respectively. Though its ad load has been rising, the company has been taking a measured approach in order not to alienate users who have plenty of alternatives.
- Shares have topped $29 for the first time since April.
Jun. 13, 2014, 9:18 AM
- YELP +9.4% premarket, Groupon (GRPN) +7.1%, Pandora (P) +3.5%, Angie's List (ANGI) +4.7%, TripAdvisor (TRIP) +3%, and Zynga (ZNGA) +2.3% after Priceline announces it's buying OpenTable for $2.6B (a 46% premium to yesterday's close).
- OpenTable (OPEN), meanwhile, is up to $104.18 - $1.18 above Priceline's acquisition price - as investors bet a higher offer (perhaps from Google, eBay, or Amazon?) will arrive.
- The deal is the largest acquisition of a public U.S. Internet company in recent history.
Jun. 12, 2014, 9:20 AM
- Prime Music will provide ad-free, on-demand streaming to 1M+ songs to Amazon's (AMZN) Prime subs. Mobile streaming is included, as is an offline download option.
- As expected, popular Universal Music acts aren't included, and neither are most current hits from other labels. TechCrunch observes only 1 of the top-10 songs in the Billboard Hot 100 is available.
- In terms of size, Amazon's catalog is roughly on par with Pandora's (P), but much smaller than Spotify's 20M+. Amazon's primary goal, of course, is to keep its Prime sub base (reportedly now above 20M) happy, and to give others a fresh incentive to sign up for the $99/year service.
Jun. 11, 2014, 4:33 PM
- Amazon's (AMZN) Prime streaming music service won't feature Universal Music's catalog, the NYT reports. The NY Post reports something similar, while adding the service is expected to launch tomorrow.
- The NYT also states the ad-free service "will omit most new releases" - BuzzFeed has reported only songs at least 6 months old will be offered - and that Amazon "used an outside firm to obtain 'compulsory' [songwriter] licenses" through federal copyright provisions, after publishers rejected proposed contracts.
- Universal Music is one of the big-3 labels (along with Sony and Warner Music). Its artist list includes Eminem, Lady Gaga, Jay-Z, U2, and many other popular acts.
- Pandora (P) closed sharply higher following the report. Its shares fell on May 30, after BuzzFeed's report arrived.
- An Amazon event widely expected to feature a 3D smartphone launch is due a week from today.
Jun. 6, 2014, 1:38 PM
- The NY Post reports Google (GOOG +0.3%) is in talks to buy streaming radio service Songza; one source reports the offer price is $15M.
- Songa's Android/iOS apps offer curated radio stations based on mood and activity - Beats Music, soon to be in Apple's hands, does something similar.
- The company has 5.5M active users - a base much smaller than Pandora's (P +1.2%) 77M. Pandora has dipped slightly in response to the report, but remains up on the day.
- Buying Songza would provide a shot in the arm for Google's music efforts. All signs suggest the company's Spotify-like All Access music service has seen limited uptake since launching last year.
- A reported YouTube music service (would feature both music videos and audio-only streaming) might fare better, if Google can reach terms with music labels.
Jun. 4, 2014, 11:07 AM
- In its last monthly audience report (quarterly numbers will still be given), Pandora (P -2.2%) states it had 77M active listeners in May, up from 76M in April and 70.8M a year ago.
- However, listener hours only rose 1.7% M/M (in spite of an extra day) to 1.73B. On a Y/Y basis, they rose 28%.
- Pandora's share of total U.S. radio listening (influenced by seasonality) was 9.13%, down from 9.28% in April and up from 7.29% a year ago.
- The numbers come amid worries about the Apple/Beats deal, an expected iTunes Radio revamp, and Amazon's reported plans to launch a streaming music service bundled with Prime subscriptions.
May 30, 2014, 11:03 AM
- A BuzzFeed report stating Amazon is set to launch a streaming music service (covers songs at least 6 months old) that will be free for Prime subs is leading Pandora (P) to slump.
- Amazon's Prime sub base (~20M as of January, per Macquarie) is notably smaller than Pandora's active listener base (76M at the end of April) for now. Pandora, aided by its giant music-tagging database (i.e. the Music Genome Project) and the time invested by users in creating custom stations, has thus far weathered challenges from Spotify, Apple, and Google, among others.
- Shares largely moved sideways yesterday after Apple announced it's acquiring Beats and its subscription streaming service.
May 29, 2014, 2:04 PM
- Beats Music will continue supporting Android and Windows Phone post-acquisition, says Tim Cook (AAPL +1.5%). Though not a total surprise, the remarks represent the first time Apple has committed to offering apps for 3rd-party mobile platforms.
- Meanwhile, during a Code Conference talk also featuring Jimmy Iovine (live blog), Eddy Cue states Beats Music, launched only in January and trumpeted by Apple far more over the last 24 hours than Beats' headphones, now has 250K subs (via 5M downloads) - far more than the 111K it reportedly had as of March. Market leader Spotify recently topped 10M paid subs.
- Cue adds iTunes has surpassed 35B cumulative song purchases (up from 25B in Feb. '13), and that iTunes Radio now has 40M listeners; Pandora (P +0.1%) had 76M active listeners at the end of April.
- He also proclaims Apple has "the best product pipeline that I’ve seen in my 25 years at Apple," and reiterates his dislike of the current TV-viewing experience. "All we have today is glorified VCRs ... You have a bunch of disparate systems. There's no standards."
- Shares are making fresh 52-week highs, aided by PT hikes from UBS, Baird, and Piper. UBS sees U.S. survey data about iPhone contract lengths pointing to a huge iPhone 6 upgrade cycle.
- More on Apple/Beats
May 28, 2014, 5:59 PM
- "The ugly truth is that there is such a Berlin Wall between Silicon Valley and L.A. ... The two don't respect each other, don't understand each other," says Tim Cook. He's hoping new employees Jimmy Iovine and Dr. Dre will act as a bridge.
- The WSJ states Iovine and Dre will "work with both Apple's (AAPL) electronics and music-streaming divisions, spending as much time at [Apple HQ] as necessary." In an employee memo, Cook says the Beats team will report to Internet services chief Eddy Cue.
- Cook offers high praise for Beats Music, which pairs an algorithm with human curation. "We love the subscription service that they built—we think it's the first one that really got it right." He suggests in his memo the service will be integrated with iTunes.
- In an interview, Cook refers to Beats' headphone ops as "a reasonable-size business that’s fast-growing." He also predicts the deal will be accretive to FY15 (ends Sep. '15) EPS.
- IFPI estimates global music streaming/subscription sales rose 51% Y/Y in 2013, and that download sales (still 2/3 of all revenue) fell 2%. Back in March, Apple was reported to be mulling a subscription music service, and thinking of offering an Android iTunes app.
- Pandora (P), which fell when the first Apple/Beats reports arrived, is down 1% AH.
- Previous coverage
May 12, 2014, 8:50 AM
- With shares down 44% from a March high of $40.44, MKM has upgraded Pandora (P) to Buy. The firm cites Pandora's sticky audience - the company has held Apple, Spotify, and a slew of other rivals at bay - and improving ad monetization/targeting.
- Pandora ticked higher on Friday, shrugging off reports Apple is set to acquire Beats Electronics. MKM's upgrade comes five days after Pandora launched Promoted Stations, an ad solution that allows marketers to promote audio streams within a user's Stations You Might Like playlist section.
- MKM started Pandora at Sell a year ago, when shares were at $16. It upgraded the Web radio leader to Neutral on March 5, when shares were at $39.
May 9, 2014, 7:57 AM
- In a Facebook video posted by actor Tyrese Gibson, Beats co-founder Dr. Dre appears to confirm (with colorful language) his company is getting bought by Apple (AAPL) for a large sum.
- Separately, the NY Post reports Beats' other co-founder, music industry legend Jimmy Iovine, is in talks to join Apple as a creative "special adviser" to Tim Cook.
- Questions are flying about Apple's intentions for Beats, and whether the deal represents a big strategy change. While Apple has bought plenty of component, software, and services firms over the years, it has shied away from acquiring established electronics hardware brands in favor of a do-it-yourself approach. Also, audiophiles generally aren't huge fans of Beats' headphones.
- At the same time, Beats, as a consumer brand known for premium pricing, a loyal customer base, and simple/iconic design, has more than a few things in common with Apple.
- Music industry sources tell re/code Beats is doing over $1B/year in sales. The site also speculates Apple is interested in Beats' streaming service - Billboard reported in March Apple is talking with labels about a subscription streaming service, and is thinking of offering an iTunes Android app.
- Apple -0.4% premarket. Pandora (P) -3.2%; the company is no stranger to selling off on reports of Apple music forays.
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