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dgulick

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  • Pandora Media Is Still A Good Investment For The Long Haul [View article]
    @sirifair6,
    "I associate pandora with 'losing more money with every new customer'"

    That meme is a bit dated, but can understand you feeling that way since it was echoed so much in the press. It is true that Pandora does have additional expenses with every new listener, but just because they haven't been profitable on the aggregate doesn't mean they won't be. An interesting experiment is to only consider Pandora's profitable users, which would be 1. desktop users, 2. subscribers and 3. free listeners in the 8 local ad markets that Pandora's had a presence in for at least 2 years (NY, LA, Chicago, SF, Dallas, Houston, DC, Philly). In other words, delete any account that isn't profitable (like those in the radio markets Pandora has not been in for long enough, Atlanta, Boston, Miami, etc, but also ones that won't be profitable for some time, Grand Rapids, Tucson, Indianapolis...). If you did, then the company had ~$2 TTM EPS! ($40 fair value for the stock)

    The only question you need to ask yourself is, will radio ad dollars continue to follow their audience as they migrate to mobile?

    Google is "free". Facebook, too.
    Sep 29 01:58 PM | Likes Like |Link to Comment
  • Pandora Media Is Still A Good Investment For The Long Haul [View article]
    No. The only reason Pandora's local ad share is so small is because Pandora has only had sales presence in a few markets until recently. In markets where Pandora has been for some time (NY, LA, etc) they continuously sell out with RPMs (revenue per 1000 hrs of listening) exceeding $100 (compared to an overall of $43 and an FM average of $73). Basically those local markets and nationals (along with a few bucks for digital/display ads) were supporting Pandora's money losing mobile listeners in Atlanta, Boston, Miami, Detroit, Seattle, Phoenix, Minneapolis, San Diego, Tampa, Denver, Baltimore, St Louis, (etc etc). But no more, Pandora is now in 37 markets, and as those markets become profitable, they will reinvest to pursue the local ad market opportunity further.

    Currently Pandora is working within the radio ad workflow platform, getting on STRATA, Mediaocean, Telmar, getting Triton's metrics MRC accredited, etc. Radio buyers now see Pandora's audience size compared with their typical local radio station they buy from (Pandora's AQH often more than double the biggest local station!) in 276 markets across the country. Also, with McAndrews, an ad man, in the CEOs seat, I wouldn't be at all surprised to see some innovations from Pandora in programmatic ad sales for audio, similar to what Google did for digital. FM could never do this as they don't have impression data like Pandora does.

    A couple recent events that are evidence: 1. CBS just announced they are selling ~1/3 of their stations, and 2. Clear Channel just renamed themselves iHeartMedia. They are reacting to their evaporating ad revenues as the ads are going digital. But they are quite late, and in a poor position financially (Clear Channel's debt load is untenable) to compete with Pandora.
    Sep 29 12:53 PM | Likes Like |Link to Comment
  • Pandora Media Is Still A Good Investment For The Long Haul [View article]
    Already happening, 20% of Pandora's Q2 revenue is from local, the cream of the ad pool (50-200% higher CPMs than nationals), money coming straight out of Clear Channel, Cumulus and CBS Radio's pockets.

    FM radio will survive in some form, in the same way that newspapers and magazines still exist in the digital age, but at only a fraction of their former glory. The transition is already underway, FM revenues are down -20% from their peak in 2006.
    Sep 29 11:46 AM | Likes Like |Link to Comment
  • Pandora Media Is Still A Good Investment For The Long Haul [View article]
    "record labels need to compensate those losses with higher royalty costs"

    That may be true but when the CRB judges meet to determine rates all of the webcasters will be sitting on the same side of the table and, in addition to Pandora's direct deal with Merlin, iHeartMedia has cut ~25 direct deals with labels, and Apple's iTunes Radio deals with labels are all basically at current CRB rates (though muddied a bit by different song skipping allowances and some ad revenue share).

    The CRB judges are required by law to consider all of these "arms length" transactions in their rate setting. SiriusXM on the other hand may end up having to pay more though, their rates are based on a percentage of revenue and are currently getting a very good deal relative to the webcasters, their next rate setting is 2018 for the next 5 yr period.

    Also, the 1.7% ad share that you refer to is against a 7.1% share of time spend:
    http://bit.ly/1rl94zt
    Even in that article is the comment "With the company spending aggressively to grow its ad salesforce, that gap could narrow in the coming years." What the 1.7% shows is just how aggressively Pandora has pursued growth over monetization (going from 2% of US radio listening in 2010, to 9% today).

    But now Pandora is turning their focus to monetization and is pursuing FM radio's ad dollars (today selling local ads in 37 markets, up from 8 just 2 yrs ago). In fact, the very gap you reference between ad share (1.7%) and time spend (7.1%) shows just how big Pandora's opportunity is, especially when you consider they are break even today with such a huge gap. Closing this gap will all go to the bottom line.
    Sep 27 10:20 AM | Likes Like |Link to Comment
  • eMarketer: Facebook's U.S. usage still growing, monetization outperforms [View news story]
    Don't you mean babies *with no income*?
    Sep 25 08:08 AM | 1 Like Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    I doubt SIRI or P will drop oldies, this lawsuit is more about a negotiation going forward, and few would argue that artists (or their estates) shouldn't be compensated for their work. I suspect when all is said and done they will end up roughly inline with CRB rates which would bump SIRI royalties by 15% (the pre/post-1972 song split) and Pandora will likely see somewhat less of a bump based on their younger audience (less of an interest in the Turtles!) compared with SiriusXM.

    And yes, FM radio pays not one cent of their $17B/yr revenues to owners of sound recordings. This was lobbied for under the guise of "discovery" and artists accepted it because they made plenty of money on mechanical royalties (record/tape/CD sales). However we have seen mechanical royalties collapse with the decline of CDs and iTunes "breaking the album", so artists, and not just those from the pre-1972 era, are understandably fighting for higher compensation in the new digital economy.

    But I don't see this finding as really impacting Pandora, so far this only applies to SiriusXM, and only for music played in CA, there are future lawsuits in FL and NY. Currently Pandora is only being sued in NY. So even worst case where Pandora has to pay for all pre-1972 recordings it will be some time before any of this hits the income statement.
    Sep 24 06:23 PM | 1 Like Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    Unlike the geezers subscribing to SiriusXM, none of Pandora's "freeloading kids" listen to The Turtles!
    Sep 24 01:35 PM | Likes Like |Link to Comment
  • eMarketer: Facebook's U.S. usage still growing, monetization outperforms [View news story]
    As if insurance companies are the only ones that advertise on Pandora, how about Disney?
    Sep 24 01:28 PM | Likes Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    iTunes Music does have more users, but they are users of old technology, that of buying digital music files. Apple is in a very precarious situation as iTunes is a significant revenue stream and streaming, in all incarnations is a substitute for that, how to make the transition? So far, iTunes Radio has only succeeded in further cannibalizing digital sales and Beats Music hasn't even managed to do that! Only 250k users on 5M trials, despite a huge spend (free trials, SuperBowl commercials, etc).

    (Also, Apple doesn't pay more in their direct deals, and we've covered this already: http://bit.ly/13ZmXmE)

    Some interesting articles on Apple's interesting predicament:
    http://tcrn.ch/Y1BTEd
    "With streaming eating downloads, Apple will have to make a shift or at least accomodate streaming. But it doesn’t just want to ditch sales overnight. 1.26 billion songs and 117.6 million albums were sold online in 2013, providing vital capital to the music industry."

    "Months After Beats Purchase, Apple’s Plans for Music Service Are Still Unclear"
    http://nyti.ms/Y1BTEe
    Sep 23 11:47 AM | Likes Like |Link to Comment
  • eMarketer: Facebook's U.S. usage still growing, monetization outperforms [View news story]
    You've made the "freeloading kids" argument so many times, and I've refuted it with ACTUAL DATA so many times, that one can only conclude that you consider Seeking Alpha a place to promote your short trade in hopes someone will buy your argument, with no regard for the truth of the situation. For anyone taking your advice, I wish them the best of luck.

    And here (again) is Pandora's demographic breakdown, as you can PLAINLY see, the majority of P's users are 25-54 years old:
    http://bit.ly/1mWF0It (p. 18)
    Age %_of_age_that_listen_to_P #_Millions %_of_P's_listeners
    12-24 55% 31 38%
    25-54 33% 42 51%
    55+ 11% 9 11%
    Sep 23 11:38 AM | Likes Like |Link to Comment
  • eMarketer: Facebook's U.S. usage still growing, monetization outperforms [View news story]
    From the eMarketer article one can conclude that FB has oversold it's ad ROI, and Pandora has very much undersold its ad ROI.

    Pandora with 7.1% of time spent but only 1.4% of ad spend is the old tech startup playbook of 1. get market share, then 2. monetize. Management verfiried as much recently saying that they couldn't steal FM's ad dollars before having the scale (i.e., being bigger than Z100 in New York and KIIS FM in LA, etc), which they now have (#1 radio "station" in 14 of 15 top ad markets), and as such are now building out their ad salesforce (ad seller presence in 37 local ad markets, up from 8 just 2 years ago).

    Long P and buying the dips.
    Sep 22 06:55 PM | Likes Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    Terrestrial Radio's demise began over a decade ago with the iPod, but now mobile broadband provides for SO MANY better alternatives, Pandora being the biggest, of course, but other on-demand streaming has cut into traditional radio market share too. But as radio continues its slow and imminent decline, who is there to take over that ad revenue stream? Pandora.
    Sep 22 06:39 PM | Likes Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    Artist promotion.

    Pandora pays 1/3 of all global radio royalties, so tweaks to playlists favoring Merlin's works will hit competing label's revenues directly, but this is only the tip of the iceberg, because going forward Pandora is taking over the labels/FM radio's role as "tastemakers".

    The Merlin and BMG deals include provisions for them to identify new bands/hit songs and Pandora's platform is perfect to do this as it provides the scale required, as well as direct and immediate feedback (example: execute a test sample of 1000 plays of a new band's song in test market A, B and C, results: 700 listens, 100 thumbs-up, 150 skips, 50 thumbs-down, therefore push to additional markets with the caveat to only serve the song to fans that also like bands X, Y or Z, or are under 30 yrs of age, male, in a suburb (all known as P requires a birthday, sex and zip code at signup), has kids (known because among this user's 100 stations is "Disney" or "The Lion Sleeps Tonight" for example, etc).

    Long story short, Pandora has unmatched "thumb feedback" data with their platform. And this deal shares that data with the artists. Within this data is: 1. where a band's audience is (tour planning), 2. how big it is (venue selection), as well as 3. candidate bands that band A's fans also like (for selecting touring partners), and 4. promoting the tour with direct communication to their audience.

    Band discovery was traditionally an A&R guy saying "I like your music, let's cut a record", with promotion through ad-supported terrestrial radio. Pandora takes this process digital with audience measurement metrics that have never before existed (and by the way, this measurement provides vastly superior ad targeting and ROI measurement that FM can't match either, which is why P can serve up music despite higher royalty costs with only 10% the ad load of FM! How long do you expect FM to last?).

    Music labels, publishers, and terrestrial radio are the old guard, and they have been met with new technologies/measurement techniques that they simply cannot match. THIS is why everyone is copying Pandora, iHeartMedia (Clear Channel), Rdio (Cumulus), Last.fm (CBS), etc), but they are woefully far behind Pandora.
    Sep 22 06:22 PM | 1 Like Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    CBS's Moonves selling 1/3 of their radio stations (Listen closely and you can here the funeral dirge):
    http://reut.rs/1riFgC4
    Sep 22 03:57 PM | Likes Like |Link to Comment
  • A Look Inside Pandora's New Kinder, Gentler Strategy [View article]
    Just the opposite @manic, P has the upper hand now that they have scale and monetized their platform. By striking deals with independents Pandora is putting pressure on the big labels. When artists can record on their own so cheaply, and publish to Pandora (and Soundcloud, etc) so easily, the labels are the ones that are left struggling to figure out what their role is in the new digital economy.

    (and no one ever reveals rates, so not mentioning them reveals nothing. iTunes Radio's and Beat's got out due to leaks).
    Sep 22 03:53 PM | Likes Like |Link to Comment
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