Songza Takes a Bite Out of Pandora
— An upstart Internet radio company has caused Pandora Media, the leading Internet radio service, to drop 11.2% over the last two trading days and shed $208 million of market value. If you haven’t heard of Songza, you have now.
BTIG analyst Richard Greenfield warned in a blog post Tuesday that Pandora investors should be worried by the sudden rise of Songza. Released Thursday, Songza’s iPad app was the No. 1 free iPad app at iTunes on Friday night. Songza’s Eric Davich tells Billboard.biz the iPad app was installed 710,000 times through Tuesday evening. Songza, which offers a collection of playlists for moods and interests, had previously released apps for iPhone and Android.
Greenfield’s post caused shares of Pandora Media to drop nearly 6% to $10.49 on Tuesday (the Nasdaq and the S&P 500 was up 1.2%) and another 5.6% to $9.90 on Wednesday (the Nasdaq and the S&P 500 were down 0.9% and 0.7%, respectively).
The instant success of Songza’s iPad app seemed to take Greenfield — and Pandora’s investors — by surprise. “In many ways Songza’s simplicity and focus on mobile life, reminds us of what drove Instagram’s success, as consumer web activity shifts far faster than expected from computers to mobile devices,” Greenfield wrote.
The fact that Pandora has competition is old news. Investors need not wait for the next Songza, Spotify or iHeartRadio before they decide Pandora will face a steady stream of nimble, creative music services. The barriers to entry to Internet radio are low enough that Pandora will constantly have to fend off competitors. Optimistic investors can point to Pandora’s strong brand and its ability thus far to attain market dominance in the same market conditions that have caused pessimists to sell. Pessimistic investors will think Pandora cannot protect its competitive advantages over the long term.
But Pandora’s market capitalization shouldn’t take a hit each time a buzzworthy Internet radio company makes a splash. The company has grown active users and listening hours while numerous competitors have trailed far behind. Pandora finished May with 53.3 million active listeners and amassed 1.1 billion listener hours in the month, up 87% from the previous May. And let’s not forget the Pandora brand. It’s well established and strong enough to take on newcomers.
But Pandora and Songza have important differences. Pandora is competing for radio advertising dollars, not the Internet advertising dollars that most of its competitors are seeking (Clear Channel’s iHeartRadio is the only competitor worth mentioning that targets radio advertising). To get radio advertising dollars means having the right relationships with the people who spend radio advertising dollars. Not every Internet radio company is built and staffed to compete for radio advertising dollars, and Pandora’s ability to tap into that market gives it a small mote between it and many of its competition.
But the main thrust behind Greenfield’s post remains: Pandora is bound to have competition and occasionally could have some stiff competition from smart, energetic services like Songza.
Attorney Richard Busch on Copyright Battles: Artist 1, Publisher 0
— Attorney Richard Busch has been watching copyright battles ahead of rights termination on January 1, 2013, for works released on or after January 1, 1978. His latest message: Artist 1, Publisher 0. Busch was referring to court victory of Village People singer Victor Willis over French music publisher Scorpio Music S.A and its administrator in the United States, Can’t Stop Productions. Willis was able to terminate his grant of his copyright interest.
“The court agreed with Willis, and dismissed the case, while making it clear that Willis’s termination affects only the copyright interests transferred by Willis and does not affect the other co-authors’ interest in the joint work,” he explained.
Busch is an attorney at King & Ballow, which is best known for representing F.B.T. Productions in its royalties victory over Aftermath Records. Since then Busch has handled claims by Peter Frampton, Michael McDonald, “Weird Al” Yankovich, Kenny Rogers and the estate of late Knack drummer Bruce Gary.
“This is the decision of just one court, and others, including the 9th Circuit Court of Appeals, and possibly even the United States Supreme Court, may see it differently. As the January 1, 2013 ‘Judgment Day’ approaches, expect to see more of these termination battles. As I previously mentioned, the outcomes are critical. There are billions of dollars at stake collectively in these fights, and the copyright assignees are not going to go down easily,” he says.
Gracenote Buys Bulldog United
— Gracenote has acquired Bulldog United, the developer of a video fingerprinting technology for smart TV. Terms of the deal were not disclosed.
Gracenote wants to use Bulldog’s technology to offer TV manufacturers a way to integrate frame-level video fingerprinting in the TV’s primary screen to identify a video whether it is being played on cable, satellite or a DVD player. Once the content has been identified, the TV can suggest additional video content or interact with apps or promotions.
Gracenote, owned by Sony Corporation of America, has a database of more than 130 million music tracks as well as movie and TV show metadata.
( Gracenote press release)