Pandora's Stock Hits All-Time Low
Pandora's stock fell to an all-time low of $9.03 Monday and closed at $9.18, a 7.46% dip. The root cause for Monday's decline appears to be an analyst's report that surfaced Thursday but wasn't fully absorbed until Monday (the stock markets were closed Friday).
Barclays Equity Research analyst Anthony DiClemente initiated his coverage of Pandora with an "underweight" rating and a price target of $8. DiClemente wrote in a note to investors that he does not expect Pandora to be profitable until the company's fiscal 2016 year and warns the company "will have a hard time leveraging its content costs as royalty rates are variable and based on total listener hours and gross revenue."
The company's stock reached $10.27 on Tuesday after the company released figures showing continued strong growth in listener hours and market share. While other analysts' price targets well above the current trading price, Monday's drop indicates some investors are skeptical of Pandora's ability to match advertising revenue to growth in listener hours and content costs.
Shares of Pandora opened trading at $20 on June 15 and peaked that day at $26 before ending the day at $17.42. The stock has closed above $20 only once - July 5 - and has fallen below $10 numerous other times. ( MarketWatch)
Rdio Wants To "Become More Like Pandora"
Music subscription service Rdio is working on improving its radio functions. "We need to get better at passive listening," VP of Product Malthe Sigurdsson told GigaOm, who added the company's goal is to "become more like Pandora."
The impulse to become more like Pandora is obvious: mainstream consumers like radio. But on-demand services that covet Pandora's listener hours are at a disadvantage because they simply aren't Internet radio services. The single-minded purpose of Pandora is crystal clear in the minds of consumers. Even the term "Internet radio" gives Pandora an advantage because it allows consumers to make a connection to an existing and popular product, terrestrial radio. The simplicity and familiarity of Pandora is one reason why the company added 4 million active U.S. users in February and March alone (active users rose to 51 million at the end of March from 47 million at the end of January, according to figures released by the company).
Rdio and Spotify, on the other hand, are a tougher sell because they are more diverse products. They are music discovery products with playlists, albums and social features that require active participation rather than passive listening (with the exception of the excellent Soundrop app for Spotify that mimics Internet radio). These services may have Internet radio features, but they are not Internet radio services first and foremost, nor do they provide the kind of one-button access consumers can find on pure-play Internet radio services. In any case, expect Pandora envy to continue as on-demand services reshape their products in an effort to lure more listeners. ( GigaOm)
Wellesley University Professor Champions France's Anti-Piracy HADOPI Law
France's HADOPI anti-piracy system has had a negative impact on piracy and a positive impact on sales, says Professor Brett Danaher from Wellesley University. Danaher, who has a working paper on the topic with three other researchers, presented his findings at the Global Forum at Canadian Music Week. The presentation can be found on YouTube and makes for a user-friendly alternative to the academic paper.
The researchers estimate the awareness of HADOPI led to an increase of digital sales of 22.5% to 25% relative to its control group of European countries. Thus, HADOPI, a "three strikes" law passed in 2009 and implemented in late 2010, appears to have played a role in France's relatively healthy music market. Digital revenue in France increased 25.7% in 2011 while physical sales fell just 10.4%, according to the IFPI's "Music Industry in Numbers 2012." The country's digital was up 13.9% in 2010, the first full year after French citizens became aware of HADOPI, but experienced no gain in 2009.
How can people be sure the sales increase is not related to a totally different event that arose independently of and concurrently with HADOPI? The increase in sales does not appear to be tied to release schedules or factors that would favor one label over another. Danaher is not allowed to show the sales data of reach individual record label, but he says each of the four majors' sales data displays roughly the same trend.
Danaher also looked at genres for evidence of HADOPI's impact. He explained that some genres have lower levels of piracy (classical, folk, jazz, Christian rock) relative to legal sales while other genres have higher levels of piracy (rap). Danaher hypothesized that if HADOPI was behind the change in sales the high-piracy genres would show a greater change than the low-piracy genres. And that's exactly what the data shows. High-piracy genres saw a 30% gain in sales while low-piracy genres increased 8% and average-piracy genres reflected the average increase in sales of 17.5%. "So the pattern across genres was exactly what you would expect if the effect of HADOPI was to stop some people from file sharing and convert them to legal purchases."
Danaher also addressed an article at the French paper Le Monde that claimed the rise in iTunes sales was due to a rise in the popularity of the iPhone. But Danaher said there is "no substance" to the claims and showed data that the growth in iPhone penetration in the control group countries was actually higher than iPhone penetration growth in France from 2008 to 2010. In other words, other countries liked the iPhone as much or more than France but didn't exhibit the same growth in iTunes sales. ( YouTube)