Seeking Alpha

dgulick

dgulick
Send Message
View as an RSS Feed
View dgulick's Comments BY TICKER:
Latest  |  Highest rated
  • Pandora Will Struggle To Break Even, If It Ever Gets There [View article]
    What you are missing in your analysis is that mobile RPMs (the reason for the recent massive usage growth and also the culprit pressuring margins) have come up from $15/1000 hrs in 2010 to $43 today (+26% growth last year) all while maintaining low ad loads. P did this by pursuing higher CPM local ads, which is still only a fraction of their makeup (and yet is $10B of FMs $15B/yr), but P just doubled down hiring 100 new ad sellers. Considering P desktop is at $62 and FM today stands at $73 I think P can monetize mobile without increasing ad load, something no competitor can as none comes close to P in scale of local listeners to make it worthwhile for a local advertiser (Pandora is #1 "station" in 14 of 15 ad markets, larger AQH than Z-100, KISS-FM, etc). Eventually the private equity and VC money that is funding Pandora's "competitors" will cut and run when they realize their pets will never compete with Pandora's 10 yr lead, a massive moat even to the deep pocketed/"ecosystem" players that aren't in business to lose money.

    I do tend to agree with you that the big players will eventually realize how far behind they are and buy P, but that likely won't happen until after CRB rate setting this December.
    May 27, 2015. 06:50 PM | 1 Like Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Stock is going to $70, so if you bought in 30s you'll still be made whole, but only ~15% CAGR over the next 5 yrs, whereas buying today is ~30% CAGR (and a potential double by next year). While we're calling each other out, you recommended shorting when shares were $14.50 calling a PT of $3, how's that working out?
    May 27, 2015. 02:07 PM | 1 Like Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    I never recommended people buy in the 30s, I did in the 20s and I definitely do at today's prices. And for the record, you called this a short in the 20s as prices went to 40 a few months later. There is small float and therefore high volatility, and you called the drop, congrats, but its played out, this sell off is overdone (which makes for a very attractive entry point!). Remember in the short term the market is a voting booth, but in the long term its a weighing machine, all of your banter is meaningless on that time scale as quarterly profits trump any uncertainty.
    May 27, 2015. 09:22 AM | Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    The author's shortfall is failing to realize that monetization lags growth, especially when your product usage explodes as it did in Pandora's case (the only thing realized instantly is the royalty expense! Resulting in low profitability, as you enjoy pointing out). In fact Pandora's usage is growing so fast that twice in its history Pandora has had to curtail it by placing a cap on free listening at 40hrs/month (once for desktop in 2010, and again for mobile in 2013). After Pandora got their legs under them (i.e., hiring ad sellers to fill the inventory gap) they removed the cap.

    The author can wait for cash flow but he'll miss today's discounted share price (and a rather large investment return) as "you pay dearly for a cheery consensus" (which is exactly what we'll see this time next year with CRB rates behind them and continued mobile monetization).
    May 26, 2015. 05:37 PM | 1 Like Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Pandora didn't invent anything? You're in utter denial manic! I guarantee none of the copycats would even deny their inspiration after witnessing this:

    Year Listeners Streaming_Hrs
    2007 2M 0.3B
    2008 7M 0.8B
    2009 15M 2B
    2010 28M 4B
    2011 48M 8B
    2012 67M 14B
    2013 76M 17B
    2014 82M 20B
    May 26, 2015. 04:21 PM | 2 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Exactly! Ask yourself why all of the established players (Apple, Google, Microsoft, Clear Channel, SiriusXM) would copy (poorly) such a weak business model? Maybe something to do with the 10x growth in mobile ad revenue Pandora raked in in the past 4 yrs?
    May 26, 2015. 02:07 PM | 2 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    The negative speculation in that article does a great job of explaining where we've been, but is quite myopic as to where we are headed. In particular what the value of 10% of US radio listening (and growing) will be as Pandora's investments in ad sellers continue to bear fruit.
    May 26, 2015. 12:25 PM | 3 Likes Like |Link to Comment
  • Nuance's Dragon TV built into revamped Roku 3 set-top [View news story]
    A pureplay in the voice recognition space with medical, auto and enterprise revenue streams as well, all with tremendous growth potential.
    May 26, 2015. 11:40 AM | Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Ironic as Pink Floyd is getting paid by Pandora and Spotify who are monetizing a generation that simply doesn't buy music. (And is getting them incremental income from many that bought their albums years ago but prefer the simplicity Pandora provides, me, for example). Streaming can be thought of as MaaS (Music as a service), a pay as you listen, as opposed to the old pay upfront model of ownership (CDs, downloads). But just as SaaS (and PaaS, IaaS, etc) is emerging from a misunderstood transition period, MaaS will as well, and will eventually replace former music distribution methods. Pandora's share price represents a great opportunity for those with the fortitude to ride out this transition period.
    May 26, 2015. 10:51 AM | 2 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    "same ADS"

    True, record labels gave Spotify same pricing as Pandora but for on-demand music, is it any wonder that growth slowed for non-interactive webcasters? (which are required by law to adhere to DMCA limits on spins from same artists or songs from the same album per hour, 6 skips per hour, no rewinding, etc). It is also no surprise that record labels are realizing their mistake and are not renewing these contracts with Spotify since it is being used against them in CRB rate setting, not to mention accelerating the decline in CD and digital sales.

    As for P stock being up 30%, the recent decline was overdone. And today's price is more than 50% below the all-time high seen last March as investors responded with exuberance to Pandora's easy fending off of Apple's iTunes Radio.

    With the threat of competitors behind them (as Pandora's growth in usage and revenue continues unabated despite all possible entrants already in the space), the only overhang left is royalties. But as Pandora's largest expense item gets sorted out later this year (at half of revenue and set for the next 5 years) the difficulty over calculating fair share price (as seen in analyst PTs ranging from $10 to $40s) will be over and shares will roar back to their previous high. Huge upside potential from where we stand today.
    May 25, 2015. 01:10 PM | 3 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Spotify is on-demand, therefore not a non-interactive webcaster, so Spotify's royalty rates will be thrown out for the upcoming CRB rate setting. Also remember that the NAB, iHeartMedia and SiriusXM (among others) are all on the same side of the table as Pandora on this issue, and they all have direct deals that support the lower rates they are proposing (in fact iHeartMedia and NAB have "expert testimony" supporting a rate half of what Pandora is seeking http://bit.ly/1dsi9lp ). You are doing a fine job of promoting fear about the upcoming rate setting, but to the extent you are hoping for a big payout after rates are announced you are going to be disappointed, all of the negativity is already priced in.
    May 24, 2015. 07:26 PM | 2 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Illegally, SoundExchange will shut them down just like they did Grooveshark. Soundcloud is just barely above board as well and spend most of their time taking down copyrighted works (much to the chagrin of users which will evenutally migrate to Pandora to get free legal music).
    May 22, 2015. 12:08 PM | 2 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    Those are all on-demand services, Pandora is radio and pays the same (or more in some cases) as every other *radio* service (iHeartRadio, iTunes Radio, Slacker, TuneIn, 8Tracks, Songza, Radio.com, etc). And keep in mind piracy (which has more usage than any of these service) and FM radio pays $0.
    May 22, 2015. 11:53 AM | 2 Likes Like |Link to Comment
  • Pandora buying music analytics firm Next Big Sound [View news story]
    mmmm .... i think i'd like a poptart... mmmmmm

    Btw, did you read the article?:
    " for every dollar spent on advertising, Pop-Tarts received over three dollars in incremental sales...validating Pandora’s effectiveness."

    "The ability to link actual retail sales with ad exposures to measure the financial performance of advertising is becoming the foundational standard"

    So much for FM radio's "long tails" (wasted advertising!)
    May 21, 2015. 02:50 PM | 3 Likes Like |Link to Comment
  • Why I Changed My Short Position To Long On Pandora [View article]
    No. First off partial withdrawal is only being *considered*, and even then only for songwriters (less than 10% of Pandora's royalty burden), not performers.

    But lets assume partial withdrawal is allowed of anyone from any PRO, Pandora will just stream music from those that offer reasonable rates (and in fact Pandora is already doing this, bumping up spins for Merlin, Naxos and BMG, expect more of these deals in the future.)

    Keep in mind, Pandora pays artists a much higher percent of their take than any other form of radio (FM at 2%, SiriusXM at <10%, P at 50% of revenue). So despite all the posturing, the music industry isn't going to walk away from this money, and while Spotify (et al) is paying more (as they should for the flexibility allowed by an on-demand service) the music industry is well aware of the limited market that is willing pay $10/month. Pandora is monetizing the lean back listener that doesn't desire the control of on-demand nor do they mind a few ads in exchange for free radio. And also P monetizes a mid-tier between the free and $10/month, namely an ad-free radio experience at $5/month.
    May 21, 2015. 02:41 PM | 1 Like Like |Link to Comment
COMMENTS STATS
1,824 Comments
960 Likes