“Free” Pandora Has Hidden Limits

A funny thing happened the other day.  We were listening to Pandora online, as usual, and the music stopped.  We were not asked if we were “still listening” nor had we skipped too many songs.

Instead, we found out that the “free” Pandora that already hits you with both ads and a need to keep telling it you are still, in fact, listening, has a 40-hour-per-month listening limit.  Once you reach 40 hours in a month you have to upgrade to a premium account to keep listening.

While 40 hours of music seems like a lot, that wouldn’t cover more than one full work-week a month.  I can’t imagine this problem strikes many users but, considering all the other limitations already imposed on their “free” account, this new limitation is disheartening.

It also led to us moving on to use Slacker.com and Last.FM as an alternative.  Now that a new month is upon us we are reluctant to return to Pandora.

Not sound business, Pandora.

Five Reasons Why Buying Music is Headed for the History Books

The collapse of the traditional music industry has been well documented.  The Virgin MegaStore just closed for good in Union Square and the Tower Records franchise that was once a vibrant hub for music is gone from the landscape.  The number of CDs sold is at an all-time low and I am willing to bet if you eliminated all sales of CDs to anyone over 30 the figures would be staggeringly low.

Sure, for the moment, there is still a brisk business in the sale of legal digital downloads.  iTunes and Amazon both seem to be making some reasonable coin on the practice.  Still, it is hard to imagine that this will last much longer.

Here are five reasons why buying music is headed for the history books:

1) The legacy of Napster – Napster, in its original incarnation, was our first taste of how easy, fun and beneficial it was to be able to share your entire music collection with other people all over the world and have the chance to share the music libraries of those very same folks.  Sure, the free aspect was cool, but the best part was the endless selection and immediate accessibility.  Napster taught us that music did not have to be locked down on physical formats or hidden behind DRM.

2) The Return of “Radio” – Sure, traditional, terrestrial radio may not be a threat to record sales, but the world of webcasters combined with the fact that all those traditional stations are available online means that there are an endless stream of free listening options that combine the ability to refine genres with the chance to discover new music.  From Pandora to Last.FM to the basic “radio” options embedded in iTunes, it’s easier than ever to simply tune in, sit back and enjoy.

3) The iPhone (and its brethren) – Nearly every major music webcaster now has an iPhone application that will stream content to you anywhere you can get a signal.  This is not limited to WiFi zones but most will deliver content of 3G and even Edge.  This means that unless you spend a lot of time underground (like I do in the NYC subways) you never have to disconnect from the flow.  Why cart around 10,000 songs when you can just press the Slacker icon and gain access to over 1,000,000 tunes.

4) Songza et. al. – For those not familiar with the site, Songza.com is a music search site that scours the web (mostly YouTube, actually) for recordings of any song or artist you enter into the search box.  This solves the, “I wanna hear the song right now” problem that you face with Pandora and the like.  Whether the major labels and RIAA like it, just about every song and artist I can come up with results in a successful search on Songza.  The point is, legal or otherwise, every song is out there somewhere already, making it tough to convince me why I should pay to buy it.

5) The Generation Gap – Try this: find any kid under the age of 15 and ask them what was the last album they bought.  Chances are, there is no last album.  In fact, studies in the UK have shown that kids are  buying less music online but they are not replacing that with some kind of piracy – they’re just not downloading music to “own” for free or for a fee.  What’s the point of buying music when it is already out there to be heard?

Better Options, Not Legal Threats, Curb Music Piracy

A recent report is showing that the prevalence of P2P music file-sharing is on the decline but it turns out to have little to do with groups like the RIAA suing music fans:

The plethora of legal music options online has prompted Internet users in the UK to cut down on their P2P ways. According to an annual report from media and technology research firm The Leading Question, monthly file sharing has dropped among all users since the last national survey in 2007. The drop is particularly significant among teens, where file-sharing has declined by a third.     LINK

So where are teens going for their music?  To legal streaming sites like Last.FM, Pandora and Slacker.  See, as soon as there is a useful, accessible and easy option to P2P services, users are more than happy to make the switch.

Instead of spending all their time and energy suing music fans, the music industry needs to focus their resources on creating true competition to piracy. That is the only road to sustainability for the industry.  While this shift will mean a huge shake up in the current power-structure it beats losing everything to those dastardly pirates.

Pandora Offers Premium Ad-Free Plan

As if they had been reading my mind (holy crap, that’s what their app really does!!) Pandora has announced a premium subscription service providing ad-free music streaming.

I had proposed that this would be a huge profit-maker for Pandora at $5/year.  Pandora is going to make it a bit more expensive with a price of $36/year.  Here is some of what that gets you in addition to no ads:

* High Quality Streaming: When listening on the web, experience 192K bits per second audio. That’s the highest quality streaming experience on the Internet.

* Skip All Day Long: With the standard ad supported version of Pandora you’re limited to 12 total skips per day. With Pandora One you’ll be able to skip as many times per day as you’d like (note you will still be limited, thanks to licensing constraints, to six skips per hour per station).

There’s some other little bits too but that’s the gist of it.

So, is it worth $36/year?  Would they have gotten enough more paid subscribers with a significantly lower price?

Pondering Pandora’s Possible Profits

Pandora is easily one of my favorite streaming music sites and one of my most used iPhone apps so I can’t say I was shocked to read that they are headed toward profitability within the next year:

Revenue may double this year to about $40 million, Westergren, 43, said in an interview yesterday in San Francisco. The advertising-supported service has 27 million registered users and is adding members at 50,000 to 60,000 a day, faster than in previous years.  LINK

Now, I have no idea what their costs are for running the site, streaming all that data and paying the royaltees but $40 million in revenue is pretty good for a site that doesn’t charge users.

However, a closer look at their numbers has me wondering.  With close to 30 million registered users and $40 million in revenue, it means that Pandora is only making a little over $1/year per registered user.  That strikes me as awfully low.

Napster just launched a plan to let user stream specific music for $60/year ad-free.  I wonder if Pandora’s 30 million users would pay, say $5/year for an ad-free version of Pandora’s current service?  That would be $150 million in revenue right there.  Plus, Pandora is already fully portable, unlike Napster.

Napster, Reborn, Again, Tries the Subscription Plan

Napster holds a special place in internet history as one of the first sites to bring P2P file-sharing to the masses.  Napster is also often wrongly blamed for bring down the music industry.  Those of us with even a shred of intelligence understand that the music industry, or big labels to be more specific, brought themselves down with bad business practices that treated musicians as indentured servants and fans as potential criminals.

Anyhow, Napster was bought by BestBuy not too long ago and they have relaunched with a model that is growing in popularity:

…if you subscribe for a year and pay $60, you get a year’s subscription to a pretty decent on-demand music service. You also get access to 60 commercial-free internet radio stations and 1,400 “expertly programmed playlists.” And when you cancel the service, you’ll get to keep 60 songs… which probably would have cost you about $60 anyway if you’d purchased them from Amazon, iTunes, or another online music store. LINK

Of course, this isn’t anywhere close to the first subscription music service and right now it requires you to be at your computer and online to use the service – no portable device support as of yet.

The advantage of this service to something free like Slacker.com or Pandora.com is that it gives you the freedom to pick the exact songs you want to hear when you want to hear them.

Here are the issues that will effect the potential success or failure of the Napster plan:

1) Is $60/year a price the market will deem “fair” AND is it enough money for Napster to pay the rightsholders should users stream music at heavy rates?

2) Will the lack of portability make this a no-go from the get-go?

3) Can Napster supply a broad enough library of music to keep the audience happy?

4) With all the free options out there is this enough of a service to compete?

You Mean People Used to BUY Music?!

I am pretty sure that’s what my kids will ask me one day as we sit around the 3D replicator waiting for it to spit out little Jamison’s first Zero-G Scooter.

Via the good folks at PSFK, I was reading that not only have traditional music sales been dropping faster than the Dow Jones Industrial Average, but P2P file-sharing of music is also falling at a similar rate.  For all their blustering and suing, it turns out the music pirates don’t have much to do with the drop in music sales.

Instead, it looks like it is the growing popularity of streaming on-demand music from sites like Pandora and Slacker and Last.fm – something not all that different, really, from traditional radio.  The thinking goes, why should I buy all this music when I can have access to an unlimited selection of tunes.  While there are some limits placed on how much you can control the song selection and short ads are a part of the mix the cost is zero.  Hard to make a better argument in this economy than “hey, get your free music right here, right now.”

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Kevin Kelly Gets Me Thinking About What I Own

Kevin Kelly has a great post on the notion of moving from an ownership-based world to an access-based world.  Here’s a taste:

Very likely, in the near future, I won’t “own” any music, or books, or movies. Instead I will have immediate access to all music, all books, all movies using an always-on service, via a subscription fee or tax. I won’t buy – as in make a decision to own — any individual music or books because I can simply request to see or hear them on demand from the stream of ALL. I may pay for them in bulk but I won’t own them. The request to enjoy a work is thus separated from the more complicated choice of whether I want to “own” it. I can consume a movie, music or book without having to decide or follow up on ownership.

In many ways, a lot of us are already there.  The truth is I haven’t bought an media in a physical format in ages.  Not a CD or DVD to speak of and even my dead-tree book purchases have plummeted.

Just what has replaced all of these hard-good purchases? My NetFlix subscription, Pandora, Boxee, Stanza, ITunes and all the rest.  When it gets right down to it about the only things I really buy-to-own these days are food and alcohol and I don’t really “own” those for long.

Of course, the idea of a subscription-based life works for goods that have little-to-no scarcity factor it seems less likely that rental will replace all aspects of ownership.

Check out KK’s whole post.

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