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  • Is Pandora A Good Music Streaming Play? [View article]

    "2.8x sales typically isn't cheap for a company that has negative operating margins"

    Depends on the degree P expands that margin. Clearly they are pouring all available top line growth back into the business with significant hiring in ad sellers and product engineers, +441 net increase to headcount this past year (+34%). With overhead this results in roughly a $100M hit to today's bottom line, but this investment will be realized in out years. Also consider P has managed this growth with no debt to repay. I see shares quite undervalued.
    Aug 17, 2015. 12:08 PM | 2 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    Positive Suntrust report out today. Peck reiterates his $25 PT with particular praise for sponsored listening stating it will help give Pandora's "monetization engine significant tailwinds through 2016":

    "...the new ad unit can achieve an RPM of $200...a $250 million lift in total annual revenue...15 percent lift to 2016 consensus"
    Aug 12, 2015. 06:04 PM | 1 Like Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    Harrison is an old guard holdover from Pandora's more adversarial stance regarding royalties (IRFA, etc) and in fact is considered vitriol by the music industry . This has put him at odds with the more recent Pandora hires CEO McAndrews and CFO Herring and the more artist friendly direction they are taking Pandora (free AMP, free artist messaging, facilitating concerts like Summer Crush, etc.) In fact, it wouldn't surprise me if Harrison's departure was involuntary considering the timing with the recent BMI court case failure (so far) and in particular Harrison's ND radio station purchase "stunt" (or could his departure even be an oblation to the Big 3 Labels before CRB rate setting? I digress...)

    McAndrews and Herring have shifted the companies focus to top line growth, even stating a belief that high royalty costs should actually be correctly viewed as a barrier to entry for competitors that lack the scale to compete. Spin? Not if Pandora can expand its top line to accommodate the burden. So the recent quarterly beats/guidance raises along with the recent announcement that Pandora will actually start to spend to advertise provide further evidence that they are succeeding and looking to expand. More evidence needed? How about this piece from today:

    Pandora Keeps Rocking at 125 Park Avenue
    "Pandora has doubled its...square feet in the Grand Central Terminal-area building"
    Aug 11, 2015. 04:36 PM | 3 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    Youtube pays less, iHeartRadio pays less (as do all RMLC digital services, e.g., CBS, Cumulus, etc), SiriusXM pays much less, FM radio pays much, much, much less (US is only country to not pay artists for radio play except China, N. Korea and Iraq, despite ~20 attempts in the past century, starting with Frank Sinatra, to change that! Record labels' most recent defeat just this year ).

    The only services that pay more are full feature on-demand services (with double the subscription price), something Pandora is not.
    Jul 30, 2015. 02:01 PM | 2 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    BMG pulled their library from P and now are being paid less in their direct deal, the ability to do a partial withdrawal doesn't guarantee a higher rate. Also, you need to realize Pandora's size makes them promotional just like Youtube. YouTube pays even less than Pandora per stream (and no compulsory license!) yet Swift didn't pull her music from YouTube, and people have played her new songs, on-demand, over 1B times!

    Despite all the posturing by Universal, Sony, etc, Pandora has more negotiating power than they care to admit.
    Jul 30, 2015. 10:30 AM | 1 Like Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    She (Big Machine) was good with the subscription side, but didn't think her new album should be available free, and tried to get the album on the paid side only and Spotify/Ek said no, giving her a take it or leave it, she left. I'm sure he regrets that, but thought if he gave in to one artists demands they all might make similar requiests, and if he watered down the free tier it would slow sub growth.

    That is far from a done deal as it requires approval of both BMI and ASCAP judges (not happening), and also only deals with songwriter royalties (small fraction of P's content costs). The compulsory performance license isn't going away, nor do labels want it to (Pandora being promotional, like YouTube), they just want higher rates. But even the biggest P bear analysts that have looked at CRB are now saying the "armageddon" rates Soundexchange proposed are off the table.
    Jul 30, 2015. 10:14 AM | 3 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    No, the free trial goes for 2 more months.
    "How many will stay in after the trial period remains to be seen."
    "Even if you wanted to pay Apple Music $10 a month to subscribe to its service, you couldn’t."
    " trial users are a far cry from paying subscribers...when a credit card prompt appears in three months time on the screens of the supposed 10 million users, that number might plummet."
    Jul 29, 2015. 08:12 PM | 2 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    Deja vu:
    "Apple notched 11 million listeners in just five days...At this pace, iTunes Radio beats Pandora in a month"

    At the time P shares got slammed, but then soared in the coming months as it became evident iTunes Radio wasn't the Pandora killer many believed.

    But also, Apple Music numbers are for free trials (who doesn't like a freebie?), lets see who sticks around. More so, according to this poll on an Apple fanboy site, only ~2.8% of Apple Music users switched from Pandora:
    I'm using Apple Music
    and its my first streaming music service 18.7%
    and switched from Spotify 32.8%
    and switched from Beats Music 2.5%
    and switched from Google Play Music 1.3%
    and switched from Rdio 1.3%
    and switched from Tidal 0.7%
    and switched from Pandora 2.8%
    but only during the three month trial 17.1%
    I'm not using Apple Music 22.9%

    So taking 2.8% of 10M results in a "loss" (keep in mind many are just kicking the tires) of 280k listeners from Pandora, or -0.35% of P's 79M users, so "no impact" Even Spotify (1 in 3 Apple Music listeners switched from Spotify), is only a -4% MAU hit).
    Jul 28, 2015. 04:54 PM | 2 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    Yes, but the continued P downloads verifies the muted impact, to say nothing of the blow back on Apple:

    Apple Music’s Worst Feature? You Can’t Delete It
    'Smart and observant writer folk rightly called out Apple’s “junk drawer” problem, their increasingly overstuffed iPhone folders labeled “Apple Crap.” It was bad then. It’s worse now. In fact, it’s gotten to the point that it’s not just frustrating for consumers. It might end up hurting Apple.'
    Jul 28, 2015. 03:55 PM | 1 Like Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    On Android too, despite Google's new free/ad-supported offering:

    (Hilarious to see all the Apple Music reviews...and everyone said P has no moat!)
    Jul 28, 2015. 03:13 PM | 3 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    Well put, P CFO Herring talked this on the call in response to a question on "how quickly do you think you can close the RPM gap with terrestrial radio?"

    Herring: "our [desktop] business this quarter had RPMs higher than terrestrial radio...and we're closing in on [mobile] pretty quickly...that will become less of a goal and more of a signpost along the side as we continue to build the business."
    Jul 28, 2015. 02:24 PM | 3 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    "I never mentioned content costs"

    IFPI's streaming revenue data is content costs.

    "Spotify user numbers in line with Pandora but growing faster"

    True, just says Spotify is giving more away: Spotify burned -$196M last year, one of these days Spotify will have to raise prices and put limits on their free tier (both will drive P user growth). But you also ignored my warning, all MAU's are not created equal. Based on Triton usage data, Spotify's 75M users average only 10hrs/month compared with Pandora's average user at 23hrs/month. Spotify's MAUs are just not heavily engaged compared with Pandora.

    "Spotify more sustainable as music industry is looking to get paid"

    To maximize revenue the music industry needs tiers to monetize different demographics, and Pandora is the only one that has successfully monetized the free listener. While the labels would love everyone to pay them $10/month it will never happen, and the music industry won't be turning their back on Pandora's $500M/yr any time soon.

    "effect of Apple Music"

    Yes, its early, but as Apple Music's release caused P shares to slump -25%, there is priced in an expectation of a significant long term impact. So the fact that, even with all the fanfare, Pandora app downloads on iOS soldiered on is significant: and also backs up McAndrews "no meaningful impact" comments. Not to mention Apple Music's horrid reviews and antitrust subpoenas


    They denied that rumor, but even so, as Google, Apple and Amazon have together had only a modest impact on P's user growth, and imperceptible effect on P's revenue growth, I'm not going to worry too much about a rumor at this point. And isn't it just further evidence that what we are seeing is a sea-change in the way big tech expects we will consume music in the future. Pandora's et al, true competitors are FM radio, CD and digital sales, which are all being laid waste as streaming's exponential growth continues.
    Jul 27, 2015. 07:08 PM | 4 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    And lastly, on growth, if you haven't noticed everyone has launched a music streaming service (Apple, Google, Amazon), with large promotional periods of free on-demand music (Apple Music at 3 months, Spotify matched it despite -$196M loss last year ) yet to the astonishment of the uneducated, P has continued to grow in both users and usage (albeit the pace has moderated). But as these giveaways inevitably end Pandora's growth will reignite.
    Jul 27, 2015. 05:51 PM | 3 Likes Like |Link to Comment
  • Is Pandora A Good Music Streaming Play? [View article]
    The ifpi data you cite is on the expense side of the equation for the streamers, so concluding that higher content costs reflect a larger opportunity is wrong. In fact, if FM radio were added to that chart it would barely register (they pay artists nothing and songwriters a very small pct of rev) and yet radio represents 80% of listening and $46B/yr in revenue.

    You then conclude from this same data a "shift in focus" to subscription based services, but when one looks at usage statistics we see clear evidence of Pandora's popularity, with usage more than double Spotify: . (Incidentally, this data also clears the air on all of the MAU noise on the subject, because when one considers engagement Pandora crushes Spotify, and in fact even challenges Facebook: )

    And as for growing resistance from content owners toward free services, that criticism is directed at Spotify's free tier where one could stream Taylor Swift's entire new album on the day of its release (for example), thus her decision to pull her music. Pandora is a radio service which must adhere to limits on consecutive songs by the same artists/album, etc., much less contentious to artists and actually promotes CD/digital sales as opposed to cannibalizing them as the on-demand services do (and Swift's music is on P).

    You make the same mistake many do, while Spotify and Pandora are the leaders in the music streaming revolution, they only partially overlap. Spotify's free tier is a loss leader to get subscribers (as evidenced by only 9% of Spotify's revenue coming from ads), whereas P has created a profitable free/ad-supported model. And even on the subscriber front, they are at different price points (Spotify at $10, Pandora at $5).

    The models are really chasing entirely different markets, Spotify after traditional music sales (a $15B/yr opportunity), Pandora after the radio market ($46B/yr ad market and *radio* subs (SiriusXM), a $5B/yr opportunity). So in addition to being wrong on Pandora as an investment, you are wrong on what their strategy should be as well.
    Jul 27, 2015. 05:23 PM | 3 Likes Like |Link to Comment
  • Pandora: Investors Should Be Patient [View article]
    Spotify rates are 2-4x Pandora's rates, but of course, Spotify is on-demand music whereas Pandora has to adhere to webcaster restrictions (limited # of skips, only 4 tracks by the same artist within a 3 hour period and no more than 3 of those tracks may be transmitted consecutively, etc).
    Jul 27, 2015. 12:03 AM | Likes Like |Link to Comment