Warner and Sony Join Universal's Lawsuit Against Grooveshark
Warner and Sony Join Universal's Lawsuit Against Grooveshark

EMI Sues Grooveshark for Breach of Contract
-- Controversial music-streaming service has been sued by EMI - again. EMI Music Publishing has Grooveshark for breach of contract, according to reports at the New York Times and other outlets.

The lawsuit, filed Wednesday in a New York State Supreme Court in Manhattan, does not specify the amount of damages EMI is seeking. But the Times' notes that emails included in the complaint as evidence state EMI had asked for at least $150,000 in royalties.

The complaint alleges Grooveshark has "made not a single royalty payment to EMI, nor provided a single accounting statement," according to the report. "This is a contract dispute that we expect to resolve," Grooveshark said in a statement to the Times. The Gainesville, Florida-based company now boasts 35 million monthly users.

EMI is the only one of the four majors that has signed a licensing agreement with Grooveshark. The parties' 2009 agreement settled a copyright infringement lawsuit brought by EMI earlier that year.

But Grooveshark faces additional - and more serious - lawsuits. Universal Music Group sued Grooveshark for copyright infringement in November. Sony Music Entertainment and Warner Music Group joined the lawsuit in December. Universal had also sued over use of pre-1972 recordings in a New York State court. ( New York Times' Media Decoder blog)

Pandora Looks at the Long Haul
-- It seems the more Pandora explains its business model, the more investors like the company. It's an attractive story for any investors looking for growth potential: an Internet radio service poised to disrupt the traditional radio business and capture a healthy share of desktop and mobile advertising in the process.

CEO Joe Kennedy talked about Pandora's model and future at Citigroup's Global Entertainment, Media and Telecommunications Conference on Wednesday.

Or maybe it was Bank of America's naming Pandora to its list of favorite small cap stocks in 2012.

Then again, maybe Thursday's bounce was simply overreaction to comments Pandora founder Tim Westergren made to Fast Company. When asked if Pandora would ever become an app on Spotify, Westergren casually replied, "Yeah, it's an interesting thing to consider."

So Kennedy makes a good case for Pandora's ability to achieve strong, long-term growth and investors cheer over the mere possibility of someday possibly integrating with Spotify? It's not the least believable scenario. Fast Company's theoretical pairing of Pandora and Spotify came on the same day Forbes.com ran a piece that called Spotify co-founder Daniel Ek "the most important man in music." With so much attention on sexy Spotify, non-interactive webcasting can start to look downright boring in comparison.

But Pandora's story is anything but boring. Radio - or whatever "lean back" listening will be called - will continue to dominate hours spent listening for the next decade. It will encounter a good deal of competition. And it may or may not merit its current market capitalization of $1.73 billion. But Pandora is well positioned to take advantage of the impending growth in Internet radio.

Pandora's problem (accusations of being relatively boring aside) is that it requires patience from an investor. Kennedy repeatedly pointed to the company's long time horizon during the conversation. "For the next few years, the smartphone device….is going to be the dominant factor in terms of Pandora's growth," he stated.

Pandora is making good inroads into automobiles, but it will take time to pay off. Kennedy pointed out that 13 million vehicles are sold "in a good year" compared to a similar number of iOS and Android devices "every quarter."

He continued, "But I see the automotive activity underneath that as a snowball that starts small but will continue to grow, and we'll wake up in five years and say, 'Holy cow, the automotive component is pretty significant.'"

The other interesting thing Kennedy said hints that the company acknowledges its competition. Westergren may shrug (as Forbes put it) at the mention of radio-like features from streaming services, but Pandora would be foolish not to stay ahead of the competition. To that end, the company strives for "fundamental improvements in the underlying algorithm" that will lead to better personalization, he said. "We continue to invest in that. We're investing more in that capability that we ever have."

Sirius Adds 1.7 Million Subscribers
-- Sirius XM added 1.7 million net subscribers in 2011, up about 20 percent from the net gain in 2010. The satellite radio service added 540,000 net subscribers in the fourth quarter alone. The company now has 21.9 million subscribers. The word "net" appears before subscribers in this context because Sirius XM, like most paid services, has an ongoing churn of gained subscribers and lost subscribers. Investors were pleased with the news. Shares of Sirius XM rose 11.5 percent Thursday to $2.04. It was the first time Sirius XM closed above $2 since August 3, 2011. (Press release)

EMI Execs' 'Forfeited' Bonuses: Reports Are a Bit Overstated
-- A report at The Guardian, based on public financial filings, claims EMI executives "forfeited" up to £41 million ($63.5 million at the current conversion rate) worth of bonuses of cash and stock. The bonuses were to be paid out by 2014 or earlier if EMI went public or was acquired. Three schemes to incentives executives were created after EMI was acquired by Terra Firma. However, Citigroup canceled the payments when it took over EMI from Terra Firma because "the sale proceeds did not exceed the relevant amount."

The report seems to make a bad situation sound worse than it probably was. The key part of the article is the words "up to" when describing the amount of bonuses missed. The £41 million amount was a best-case scenario that would have been paid out "had all gone to plan." But events obviously did not go to plan, the best-case scenario did not occur and the bonuses that hinged upon those best-case scenarios were not realized. The bottom line is an unrealized bonus is not the same as a bonus that was attained and then forfeited. ( The Guardian)

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