Hello, I hope y’all are doing well today. I got a small announcement to make: my Dollar Fractions newsletter will end at the end of the month. I’m so appreciative to anyone who contributed, but I just got pushed into a big project that will eat up the next few months of my life, so I'm going to put this effort on pause. Maybe the newsletter will come back, but I learned a lot in this initial month of experimenting. I’ll still be doing it the next two weeks but November will return to simply Penny Fractions every Wednesday morning. Anyway, enough about me let’s chat a bit about Pandora’s advertising-based future and speculate on why so many people are leaving Spotify.
Pandora’s Advertising First Life
Before it was announced that SiriusXM was buying Pandora, the long-standing music streaming service made their own rather eye-raising purchase. The company bought top digital audio advertiser AdsWizz. I could say that the purchase went under the radar but truthfully nearly everything Pandora does fails to make the same dent as Apple Music or Spotify. Even though Spotify and YouTube are globally far bigger than Pandora, the online radio company is a key player in the world of digital audio advertising within the United States. Digiday even reported that:
Pandora claims to be the largest publisher of digital audio ads in the U.S., and it owns two-thirds of all digital audio inventory, the company reported in its quarterly earnings last year.
What makes AdsWizz so interesting in relation to Pandora can be found in a list of its partners, to quote an article by Adexchanger:
The ad tech company works with major audio publishers including Cox Media, iHeartMedia, Spotify, Soundcloud, Deezer and TuneIn Radio – all competitors to Pandora in the streaming audio space. But Pandora will operate AdsWizz as an independent subsidiary and AdsWizz will continue working with its current client roster.
Pandora bought an advertising company that works directly with all of its immediate competitors in the music streaming space. Apple Music and Tidal might be competing in the same space but they are not competing for the same advertising dollars. That exact reason is why Spotify in July announced a separation from AdsWizz after the company was bought by Pandora. Certainly, it’s easy to see why the Swedish company left AdsWizz, because one of their chief focuses is advertising and why have that entangled with a direct competitor.
Ignoring YouTube, Pandora is still the largest American music streaming service by sheer number of users. Spotify is over 50 million, Apple Music is somewhere over 20 million, and Pandora is still hovering above 70 million, which would sound great if not for the fact that number is right now on the decline. SiriusXM with their purchase of Pandora got access to over 60 million people that engage in advertising supported music listening. I’d only expect them to double, if not triple, down on investing in this space of digital advertising. The company even said it themselves. Scott Walker, Pandora’s senior vice president of programmatic sales, in an interview with Rainnews said:
The future of advertising is digital — personalized, targeted, more transparent in terms of what you’re getting, reach, and quality compared to traditional TV and radio channels. Then there are fast-growing new channels, smart speakers and cars. We expect digital audio can be massive.
What is so striking about online audio is just how new it really still is within the advertising space. Unlike the broader web where Facebook and Google, the duopoly, own so much of the advertising space digital audio ads is still relatively fertile terrain. (For that reason much of privacy concerns over digital advertising hasn’t taken over audio conversations yet.) Still Pandora is comparatively a veteran in this space and with the purchase of AdsWizz, it’s clear that Pandora’s most exciting offerings could be in the business of advertising, not music.
That’s why I didn’t find it too shocking to see the company’s latest announced a partnership with SoundCloud earlier this month, which to quote Billboard:
Pandora will begin handling U.S. advertising sales for fellow streaming platform SoundCloud in 2019, the two companies announced on Wednesday. The agreement will allow SoundCloud to tap into Pandora's direct sales capabilities, sea of data and recently launched audio marketplace to allow brands and advertisers the ability to purchase its U.S. ad inventory directly.
The companies said that they have more than 100 million unduplicated listeners between them in the U.S. alone, and only 13 percent audience overlap.
I’m sure Pandora would love to live in a world where they were able to still partner with Spotify but at least picking up SoundCloud isn’t a too bad of a prize.
The music side of Pandora isn’t going anywhere, unless SiriusXM were to rebrand it, but I don’t see much for the company to do in the music space. However there is a lot of ground to cover in digital audio advertising, because Pandora like SiriusXM isn’t limited to just music offering and all kinds of audio will need advertising.
Why Is Everyone Leaving Spotify?
A couple weeks ago I got a text asking what was going on at Spotify. More specifically with all of the recent number of company departures what is the direction the companies is headed?
Yesterday Rocío Guerrero, Spotify’s head of Latin Music, announced she was headed to Warner Music Group, which just adds another person to that list. Music Business Worldwide in their news stories summed up a number of 2018 Spotify departures:
Guerrero joins a long list of executives who have left Spotify over the past 12 months including Global Head of Creator Services Troy Carter, Chief Marketing Officer Seth Farbman, International Shows & Editorial boss George Ergatoudis, senior marketing and comms exec Angela Watts, Global Head of Artist & Label Marketing, Dave Rocco, former US comms chief Graham James and Global Head of Artist & Industry Partnerships Mark Williamson.
Other departures at Spotify over the past year have included the defection of Tuma Basa to YouTube Music, as well as the exit of UK/international Head of Artist & Label Services, Kevin Brown.
Those along with a few other departures do make me a little curious about what exactly is the future of the company. There appears to be a shift away from directly working with artists with news about automating playlists hints towards that line along with rumors of video content and a desire to go deeper into podcasts. Then this morning the company announced a “passive minor investment” in Distrokid, which means they won’t be directing the distrobution platform's decisions but clearly Spotify is shifting and it feels every closer to YouTube. I just hope the company paid attention to the last ten years of music industry struggles with that particular platform.
6 Links 2 Read
Music Rights-Holders Lose $2.65BN Annually Because Businesses Are Using Personal Streaming Accounts - Music Business Worldwide
This headline sound alarming but what honestly was more interesting was just how few people even knew of this police: “Around 71% of business owners in the US and 60% in the UK incorrectly believe that a personal music account gives them the right to use it for background music.” This isn’t to say ignorance of the law should be the law,but perhaps there needs to be a slightly better information around this space.
The International Federation of the Phonographic Industry report isn’t too long so I’m just giving a link here instead of flooding with endless news clips. The report touches on piracy, physical sales, streaming in China and India, and helps contextualize where streaming fits into the average fan's music diet.
My gut feeling is still to say that Spotify’s direct uploads, much like their direct deals is the company just trying to bring on new investors. Even still the Complex piece that reads a bit like a press release does give a new insight into this new feature.
I’m a quote happy mood today, but this sums up Jonathan Albright's assessment of the contemporary internet: “Western conceptions and idealistic notions about the Internet are no more. Its trajectory is now dictated in response to the demands of late capitalism. This is not so much a response to economic market pressures or “e-commerce,” nor it is the end of capitalism. It’s the harnessing of the utility of the Internet as the engine for achieving unbridled wealth and power through the accumulation of data.”
Instagram Has a Massive Harassment Problem - The Atlantic
This doesn’t directly connect to music streaming but I wanted to include this here just because Facebook, owner of Instagram, like Amazon will be playing an increased role in the future of music, so always keeping tabs.
*Whispers In Worker* Form a union. Workers can prevent billion-dollar companies from implementing technology to harm the lives of millions. I guess the government could also do this, but unions are better. Also, unions have cool buttons.
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