Clear Channel's Personalized Radio Service Due In September
-- Pandora is going to get a new competitor this year -- and it's not Spotify. Clear Channel is bringing out the big guns later this year for the debut of its personalized Internet radio service.
Expect a Pandora-like personalized radio service at Clear Channel in September, according to marketing information for the iHeartRadio Music Festival in Las Vegas. The two-day, multi-format festival will run Sept. 23-24 at the MGM Grand. Artists currently on the lineup are the Black Eyed Peas, Lady Gaga, Kenny Chesney, Carrie Underwood, Sting, David Guetta, Usher, John Mayer and Steven Tyler. The festival will be streamed live to iHeartRadio.
The personalized radio service is the result of Clear Channel's acquisition in March of Thumbplay. Bob Pittman, a Clear Channel investor and its chairman of media and entertainment platforms, told Billboard.biz that the company felt an urgency to enter the personalized Internet radio market and improve its digital products. Thus, the decision to buy Thumbplay rather than build its own service. "It speeds us to market tremendously," he said of the acquisition.
"Although only 3% of radio listening came from digital when Clear Channel picked up Thumbplay, the company sees personalized Internet radio as a growth opportunity. "We want to be in front of it," Pittman said.
(iHeartRadio Festival at Facebook)
Pandora First Financial Analyst Day: What To Expect
-- Speaking of Pandora, the company is holding its first Financial Analyst Day Tuesday morning at 8 a.m. pacific. The webcast will be broadcast live and then be archived. Expect to hear presentations that give insight into Pandora's business model and growth strategy. Also expect the discussion to kick up more talk about whether Clear Channel's upcoming personalized radio service and the coming U.S. launch of Spotify pose threats to Pandora's competitive standing.
Analysts will probably be curious to find out more about Pandora's plans to improve margins, and it's possible the presentation could raise concerns. Last week, Gilford Securities opened its coverage of the company with a "sell" rating and a $14 target price.
"Cautious investors, impressed by growth, still wonder about margins," he wrote in his report.
More coverage is on the way, however, and some of it could be more positive (although Gilford's target price of $14 is hardly a pessimistic assessment of Pandora's long-term value). When the company's quiet period ends July 25, analysts from the banks that underwrote the company's IPO will be able to start covering the company.
Pandora closed down 0.05% at $19.26 on Monday while the Dow dropped 1.2% and the Nasdaq sank 2%.
(Pandora Investor Relations)
Another Step Completed In WMG Acquisition
-- Warner Music Group completed another step in its acquisition by Access Industries when it commenced tender offers for outstanding notes. All three notes are due in 2014. One is for $465 million, another for $257,927,000 and a third for 100 million Pounds Sterling. Warner stockholders voted in approval of the acquisition at a shareholders meeting last week.
Half-Full/Half-Empty Look at Online Ad Market
-- Here's a thought-provoking tidbit from AdAge.com to consider as the online advertising market increasingly drives music business models:
"Underneath a veneer of success, the digital media industry as a whole has masked a growing existential crisis. CPMs on the Internet continue to drop like a stone, and most brand advertisers have resisted moving their dollars into digital, to the point that a now infamous $60 billion gap has opened up -- the amount of additional money that, given the amount of time consumers spend with the medium, say industry analysts, advertisers should be spending on interactive media today."
One can take a half-full or a half-empty point of view here. The half-empty view says Internet advertising still has a long way to go until brand advertisers are going to invest more of their budgets -- a problem only made worse by falling CPMs (the cost per 1,000 view measure by which Internet ads are priced). The half-full view says online advertising revenues stand to greatly increase if media companies can provide enough value and the market corrects its underperformance and comes in line with expectations.
If you get to the end of this long but really good article, you'll see both viewpoints. Some say that brands need to follow consumers, but they might be scared off if consumers continue to spend time in places that attract low-value ads (which happen to be the biggest online media properties in the world). Needless to say, artists and rights holders are going to be far better off if digital service providers attract more top name brands and don't create an environment for inexpensive text and banner ads.