Pandora Shares Closes the Week up 36%
— While most stocks were having a difficult week, Pandora Media (NYSE:P) bucked the trend and rose an astounding 10.3% Friday (to $14.65) to finish the week up 36.3%. The Nasdaq finished the week down 2.7% while the Dow Jones was up 1.3%. Both were down over 2% on Friday.
Pandora’s stock has been on a rollercoaster ride since the company’s June IPO, and its swings are never easy to figure out. The price dropped from about $12 to $10 in the middle of the month. The slump coincided with a re-launch of Clear Channel’s iHeartRadio and a pessimistic target price of $3.75 from BTIG analyst Richard Greenfield. But some investors have decided the stock had been punished enough – Pandora is up 51.3% since falling to $9.68 on September 22.
Not even a class action lawsuit could get in Pandora’s way. As the Hollywood Reporter described in a post Wednesday, a Michigan resident has claimed the company is violating the state’s Video Rental Privacy Act and Consumer Protection Act by making users’ profile pages – which include favorite songs and listening history – publicly available online. The class action suit demands statutory damages of $5,000 per person.
In stark contrast was the performance of Sirius XM (NASDAQ:SIRI). It closed the week at $1.51, down 11.8% over the last five days. At the end of the week, with the stock already down to $1.50, Sirius XM got a favorable opinion from an RBC Capital Markets Global research report that praised its OEM factory activation model and a balance sheet it believes is in “solid shape.”
Given the rollerscoaster ride that Pandora’s stock has been on over the past few months, the reason for this confidence is anyone’s guess. Its recent drop in the wake of IHeartRadio’s relaunch could be a factor in the rebound, but no single reason stands out this week.
Projekt Records v. Spotify Update
— A new post by Projekt Records owner Sam Rosenthal shows streaming payouts are small but aren’t quite as low as people think. The difference is like choosing four grains of sand over one. You have more sand to build a sandcastle, but you still don’t have much to work with.
Rosenthal’s September 23 post explaining his decision to pull the label’s catalog from Spotify and other services gained a bit of attention in the blogosphere and heightened the debate about the merits of new cloud-based music services. He cited a Spotify payout to labels of $0.00029, or 0.029 cents per stream.
But Rosenthal’s new post at the Projekt’s website updates a key number (hat tip: Mike A.). His latest figure is about four times better: $0.0013, or 0.13 cents per stream. And he noted that was the amount received by the label (which implies the amount is net of the distribution fee). Then Rosenthal breaks down that number for comparative purposes and expresses his disappointment in the value returned to labels:
“5000 plays generates around $6.50. In comparison, 5000 track downloads at iTunes generates almost $3000. To be clear: I am not suggesting that every stream would have been a sale at iTunes. Believe me, I understand the reality of the music business. I am providing that as a comparison for you. Let’s look at this another way: To earn the U.S. monthly minimum wage – $1160 – 892,307 plays a month are needed at Spotify. This is not a viable number for artists.”
Spotify has responded to similar criticism by pointing out the difference between itself and transaction-based digital services. In a statement made two weeks ago, the company explained its service “is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view.”
That’s easy to say, but it may be difficult for a label to overlook the per-stream rate paid by a streaming service when that’s one of the figures being reported on a royalty statement. Nevertheless, what’s missing from most dialogue on streaming payouts is the total revenue being generated. OK, we have a general idea of what a per-stream royalty looks like. But how many streams generated the revenue paid out?
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Old-School Late Night TV Ratings Flagging
— The exposure offered by late night television may not be what it used to. During the recent premier week, viewership for “Late Show With David Letterman” was down 15% while “The Tonight Show With Jay Leno” dropped 4%. In the 18-49 category, however, Leno dropped 20% while Letterman was down 16%. “Jimmy Kimmel Live” was up 8%, although he still lags Leno and Letterman in total viewers. ( Media Decoder blog)
Online Locker Piracy on the Rise
— ZDNet has a really good article on the potent combination online lockers and file-linking sites and other services that facilitate digital piracy. Online lockers are sites such as RapidShare that host files uploaded by their users. These sites are well known to be havens for illegally copied material. File-linking sites are basically web sites that exist so people can share links – perhaps to copyrighted material – with other people. These sites make money by selling advertisements, and the post’s author claims to know one individual who makes “an easy $3,000 a month” on such a file-linking site. The potency of the locker/linking combination is magnified by services that act as a file download manager and allow a user to download from multiple file-linking sites.
“As you can see, there’s an entire ecosystem thriving with just this one particular method of piracy (or ‘content distribution,’ as I’m sure they would prefer it to be called),” the post concludes. “It’s fast, it’s efficient, and it’s incredibly profitable for those involved. These are the modern day profiteers of piracy who make a quick and easy buck off of the losses of content owners whose otherwise for-cost products are being made easily available to the masses for free (kind of).” ( ZDNet)