Pandora should revive Rdio as pay-for-what-you-want streaming | TechCrunch pandora songs

Pandora should revive Rdio as pay-for-what-you-want streaming

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Music listeners are cheapskates. Few will pay Spotify or Apple $10 a month even to stream almost every song ever. Meanwhile, radio services like Pandora hardly scrape by on the meager ad rates after they pay out royalties.

So if Pandora wants to resuscitate the battered corpse of Rdio it acquired for $75 million last year, it can’t just be another unlimited monthly subscription. The opportunity is somewhere between free and $10 a month, and between unpredictable radio and full on demand.

If Pandora’s smart, it will build a micropayment-based or limited-access streaming service akin to a social game where you pay to unlock extra content.

Pandora Day passSee, Pandora already has a huge user base of 81 million listeners — it’s just not able to monetize them very well with radio. That led its stock price to sink 12 percent after its most recent earnings report.

And the experience isn’t great either. Sure, if you don’t care exactly what you listen to, Pandora’s personalized algorithmic radio is easy to turn on and not have to mess with. Not everyone wants to play DJ all the time.

But when you fall in love with a song, you want to listen to it again. The fact that “radio” doesn’t allow this is merely a repercussion of old broadcast technology on the AM and FM airwaves where it started. Spotify and Apple tried to solve this by building radio features into their paid services, commoditizing Pandora by turning it into just a feature. But the price isn’t right for everyone.

Back in the CD era, the average listener bought one or two $16 discs per year. They listened to the free FM radio, discovered music they loved and bought it so they could listen to it without ads whenever they wanted. But they didn’t have to spend $100+ a year for access to everything else.

If Pandora can mimic that user behavior, it could build a successful micropayment streaming service on the ruins of Rdio.

Before Rdio went bankrupt, one of its last-ditch efforts was the $3.99 Rdio Select service. It gave users instant access to up to 25 songs per day, plus ad-free radio with unlimited skipping. Pandora also offers its $0.99 Pandora One Day Pass, which lets users remove ads for $1 for 24 hours.

Rdio Select App

Whether it’s called “Pandora Select,” “Pandora Instant” or “Pandora Now,” some kind of mashup of these services could prove a popular upsell with the radio service’s listeners.

Imagine hearing a song you love on Pandora and instantly being able to buy the option to listen to just that song on demand forever? Or grabbing a day pass to unlimited on-demand streaming? Or adding the song to a small on-demand playlist you can switch to in Pandora for a cheap monthly fee?

Rather than thinking of this as Rdio 2.0 or a separate app, think of it as Pandora’s bridge into on demand. Alongside concert tickets sold through its $450 million acquisition of Ticketfly, Pandora would gain another lucrative in-house product to sell in its ads. Not only could it boost the company’s ailing business, a limited on-demand option could make the Pandora listening experience complete.

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Pandora Signs Music Rights Deal With BMG

The latest step in the music industry’s slow-motion revolution over licensing came on Thursday, when Pandora Media announced that it had struck a direct deal for music rights with BMG, the world’s fourth-largest music publisher.

BMG’s deal with Pandora is for the portions of its catalog that have been represented by Ascap and BMI, the two giant licensing groups that have long handled the performing rights — the royalty payments for whenever music is played on the radio, online or in concert — for millions of songs in the United States.

Even though BMG remains a part of Ascap and BMI, it bypassed them by making the direct deal with Pandora, for what analysts believe is a higher royalty rate than those organizations — which are governed by decades-old federal regulation — are able to obtain on their own. In exchange, the deal gives BMG and its songwriters unspecified “marketing and business benefits,” according to a statement issued Thursday by Pandora.

BMG’s large roster includes songwriters who have written hits for performers like Adele, One Direction, Beyoncé and Frank Sinatra. The company is part of Bertelsmann, the German media conglomerate.

As the music industry goes digital, and listeners flock to streaming services like Pandora, YouTube and Spotify, its biggest powers have grown increasingly dissatisfied with its old licensing system. Ascap and BMI are asking the Justice Department to update their consent decrees, and some record labels and artists have been making special deals with online outlets to get higher royalty rates or other benefits.

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Last month, for example, Pandora struck a deal with Merlin, a group that represents thousands of independent record companies in digital licensing negotiations. That deal is believed to pay the record labels slightly better royalty rates than would be available through the compulsory licensing terms available to Pandora under United States copyright law, and also give the labels access to valuable marketing insights from Pandora’s vast trove of user data. Pandora is by far the most popular Internet radio service, with about 76 million users every month.

Licensing costs have been a major concern for Pandora, and these deals may lead to higher rates. But some analysts view them as beneficial given the history of strife between Pandora and the music industry.

“In general, we believe that direct deals with labels offer better content cost visibility in the longer term, and we think they improve relations between Pandora and the artists,” Anthony DiClemente, an analyst at Nomura in New York, wrote in a research note on Thursday.

The effect of such deals on Ascap and BMI, however, is unclear. They already face defection by their largest publisher members, like Sony/ATV and Universal, if the government does not make the regulatory changes they want.

Those changes are opposed by companies that rely on Ascap and BMI for music, like radio broadcasters and Pandora itself, out of fears that it could lead to even higher rates and anticompetitive behavior by the publishers. In a rate-setting trial this year between Pandora and Ascap, a federal judge found evidence of “troubling coordination” between Ascap and its publishers, and said that this behavior “implicates a core antitrust concern.”

But even though BMG has bypassed Ascap and BMI, it does not mean it has left those groups, which under their rules can represent publishers only on a nonexclusive basis. In fact, in the Pandora announcement on Thursday, Laurent Hubert, BMG’s North American chief, reaffirmed its membership in both groups, saying that he wanted to “emphasize our strong, continuing relationship with the U.S. performing rights organizations as they play a vital role for songwriters and music publishers alike.”

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