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Showing posts with label active audiences. Show all posts
Showing posts with label active audiences. Show all posts
Tuesday, March 31, 2015
Wednesday, March 18, 2015
Streaming Music Systems Performance (Infographics)
Two interesting pieces recently. One on the relative performance of top music streaming options, the other on how those services compensate performers and writers.
Researchers at YouGov BrandIndex looked at a variety of metrics for the top 5 music streaming services in the U.S. They found Pandora to be the dominant player in the field, although Spotify has been making inroads recently. Pandora has dominant leads in most of the metrics, from number of subscribers to awareness (from both ads and word of mouth). Spotify's numbers were improving, but the researchers concluded that
As sales in the traditional music markets continued to fade, the record industry wanted more from streamers. They started arguing that the current system (which they had eagerly negotiated) was "unfair" - largely because streaming revenues were slow to develop. The attack came on three fronts.
First, that not enough money trickled down to artists and songwriters. The biggest problem with that argument is the fact that the share that trickles down to the artists and composers is determined by the rights organizations (like ASCAP and BMI) and the actual rights holders (predominantly the record labels), who take their cut off the top. So the industry argues for a larger royalty rate, of which only a small fraction would actually go to the artists and composers.
Second, streaming services differ from radio stations in that they can and do track individual consumer plays. There's no mechanism to measure how many listeners hear a song on radio. The current licensing deal with Spotify calls for royalties to be paid according to a formula that includes both a revenue percentage and the number of streams. Spotify also pays an additional set of royalties to songwriters and composers for what is termed "streaming mechanical royalties". As a consequence, Spotify pays a much higher total percentage of its revenues than Pandora. (Pandora is currently classified as an online radio service, and radio stations are currently not required to pay mechanical royalties).
The third argument is that most streaming services offer a free streaming option, which the music industry argues "cheats" the rights holders because revenues from the ads are less than subscription-based revenues. The fact that the free/paid proportions for Pandora is roughly 75/25, while Spotify's audience is more of a 50-50 split, also contributes to the difference in royalty payments. As one record label executive summarized,
One can look at this situation from the "level playing field" metaphor. Spotify wants a level playing field by getting the same deal Pandora has, Pandora wants a level playing field with broadcast radio (straight percentage of revenues, and lower percentage), and the music industry wants to raise the height of the field several feet because they cut the grass (i.e. royalties to artists and composers) too short, and aren't making enough profits from their traditional business models.
The current copyright and royalty system is a mess, largely because it was designed to deal with selling physical copies of intellectual property. The current model has never really worked well with digital reproduction, or with the growing need to replace shrinking sales revenues with licensing arrangements for emerging digital streaming channels. Add the fact that digital markets are global and have the potential to scale much higher than physical copy sales (tens of millions for hit albums in digital, while in the physical medium heyday, hits sold hundreds of thousands). Plus, they're now having to deal with younger audiences who care more about access to music than owning copies of music. In addition, artists need to recognize that the scale differences should be reflected in the setting of royalty fees - and that because digital access to their recordings remain available long after labels drop them, that they'll benefit from their work much longer under digital deals.
The debate and fights over music royalties is likely to continue for a long time, in part because the music industry is trying to hold on to an increasingly problematic business model, and is hoping to find a way to maintain their control over revenues derived from their historic role as the choke point between artists and their audiences. However, the growth of the digital economy is showing that it doesn't require multiple layers of distributors (and their growing costs) to provide access to products for potential purchasers. There are already content creators (including musicians) who have discovered that going independent can provide them much higher levels of return, as well as more control over use of their work. For the big labels, this is a fight for survival; but for society, it's a fight for who gets to control access to content (and who gets to benefit from that). As for the question of whether streaming will leave artists unhappy - the answer is yes, if the big labels remain in control, and no, if we can shift focus from preserving a declining music industry to how to develop a rights and licensing regime that promotes and protects creation of, and access to, intellectual property.
It's time we shifted our concern from protecting the old ways to think about how to develop copyright and licensing systems that benefits the creators and users of intellectual property rather than those who merely reproduce and distribute it.
(For more background, see this post about a digital music licensing panel at the 2014 CES).
Sources: Infographic: Which Streaming Services Are Winning the Battle for Millenial Eardrums, Adweek
Is the Music Streaming Industry Destined to Leave Artists Unhappy?, Adweek
"Perhaps the brands with the biggest challenge are iHeartRadio and iTunes Radio. They have reasonably high awareness levels, but do not seem to be getting traction with consumers. The conclusion is that these brands may need to try something different to generate excitement with consumers."Music streaming services largely emerged as a result of major record companies eagerness to open up a second revenue stream to help cope with declining sales of physical recordings. Initially, they were eager to license their recordings to streaming services, but faced an initial roadblock - the existing royalty systems employed two distinct approaches. Royalties for sales were based on fixed compensation for each unit sold, while royalties for licensing music to radio stations was based on a percentage of station revenues (and not directly linked to which music was played). Conceptually, the radio model seemed closest to how streaming services operated, as well as how audiences used them. Thus, most of the early deals utilized royalty payments as a percentage of revenues.
As sales in the traditional music markets continued to fade, the record industry wanted more from streamers. They started arguing that the current system (which they had eagerly negotiated) was "unfair" - largely because streaming revenues were slow to develop. The attack came on three fronts.
First, that not enough money trickled down to artists and songwriters. The biggest problem with that argument is the fact that the share that trickles down to the artists and composers is determined by the rights organizations (like ASCAP and BMI) and the actual rights holders (predominantly the record labels), who take their cut off the top. So the industry argues for a larger royalty rate, of which only a small fraction would actually go to the artists and composers.Second, streaming services differ from radio stations in that they can and do track individual consumer plays. There's no mechanism to measure how many listeners hear a song on radio. The current licensing deal with Spotify calls for royalties to be paid according to a formula that includes both a revenue percentage and the number of streams. Spotify also pays an additional set of royalties to songwriters and composers for what is termed "streaming mechanical royalties". As a consequence, Spotify pays a much higher total percentage of its revenues than Pandora. (Pandora is currently classified as an online radio service, and radio stations are currently not required to pay mechanical royalties).
"Based on the free model, the payouts we're getting on streaming is so small... The problem that we're running into is Spotify is just not converting users to the paid version quick enough."That perspective contributed to the fact that the music labels pressured Apple to raise its proposed starting subscription price for the new Beats streaming service (much like the book publishers did for iBook pricing - which the courts later ruled was an antitrust violation). But the underlying issue is that the record companies want more money, and are using artist payments to engender sympathy. If artist payments are the real problem, the music industry could solve that easily by granting them a bigger share of the payments they get, or changing accounting practices so that the artist share comes from gross payments, and not what's left after music industry costs (and profits) are covered.
One can look at this situation from the "level playing field" metaphor. Spotify wants a level playing field by getting the same deal Pandora has, Pandora wants a level playing field with broadcast radio (straight percentage of revenues, and lower percentage), and the music industry wants to raise the height of the field several feet because they cut the grass (i.e. royalties to artists and composers) too short, and aren't making enough profits from their traditional business models.
The current copyright and royalty system is a mess, largely because it was designed to deal with selling physical copies of intellectual property. The current model has never really worked well with digital reproduction, or with the growing need to replace shrinking sales revenues with licensing arrangements for emerging digital streaming channels. Add the fact that digital markets are global and have the potential to scale much higher than physical copy sales (tens of millions for hit albums in digital, while in the physical medium heyday, hits sold hundreds of thousands). Plus, they're now having to deal with younger audiences who care more about access to music than owning copies of music. In addition, artists need to recognize that the scale differences should be reflected in the setting of royalty fees - and that because digital access to their recordings remain available long after labels drop them, that they'll benefit from their work much longer under digital deals.
The debate and fights over music royalties is likely to continue for a long time, in part because the music industry is trying to hold on to an increasingly problematic business model, and is hoping to find a way to maintain their control over revenues derived from their historic role as the choke point between artists and their audiences. However, the growth of the digital economy is showing that it doesn't require multiple layers of distributors (and their growing costs) to provide access to products for potential purchasers. There are already content creators (including musicians) who have discovered that going independent can provide them much higher levels of return, as well as more control over use of their work. For the big labels, this is a fight for survival; but for society, it's a fight for who gets to control access to content (and who gets to benefit from that). As for the question of whether streaming will leave artists unhappy - the answer is yes, if the big labels remain in control, and no, if we can shift focus from preserving a declining music industry to how to develop a rights and licensing regime that promotes and protects creation of, and access to, intellectual property.
It's time we shifted our concern from protecting the old ways to think about how to develop copyright and licensing systems that benefits the creators and users of intellectual property rather than those who merely reproduce and distribute it.
(For more background, see this post about a digital music licensing panel at the 2014 CES).
Sources: Infographic: Which Streaming Services Are Winning the Battle for Millenial Eardrums, Adweek
Is the Music Streaming Industry Destined to Leave Artists Unhappy?, Adweek
Tuesday, March 3, 2015
TV on the verge of transformation
Is the television industry on the threshold of a major transformation? A number of recent industry research and reports are suggesting that major changes in how people access and view television is coming, and that will severely impact advertising revenues for local TV stations, broadcast networks, and multichannel video distributors (cable, DBS, etc.)
The changes have been going on for a decade or more, as video shifted to digital, as Internet connection speeds increased, and as new viewing platforms (PCs, smartphones, mobile tablets) emerged, and huge new collections of video content have been made available to viewers (YouTube, Netflix, etc.) These have opened new options for viewing, and have shifted control over viewing from the media outlet to the audience. Online video (from online rather than traditional TV sources) is booming, audiences are increasingly using options for time-shifting. The last few years have also seen audiences becoming increasingly multi-platform - watching TV on a wider range of devices. Use of mobile devices for watching video has risen rapidly in the last few years, particularly among younger audiences and ethnic audiences.
A recent Morgan Stanley analysis noted that shifting viewing patterns have contributed to a 50% drop in broadcast network average "live" ratings over the last decade - the measure of audience that watched the initial live broadcast. While some of that decline has resulted from cable networks capturing various niche segments, more recent declines have resulted from the rise of time-shifting options. This has led the TV industry to push for a shift to other ratings measures that include delayed viewing - Live+3 (any viewing within three days of initial broadcast) and Live+7 (any viewing within a week).
Underlying this has been a major shift in what ratings represent - from audience at a certain time, to audience for a specific program/episode. And created a problem for advertisers, as the delayed viewing options do not necessarily include the advertisements aired during the initial live broadcast.
The figure above shows that the decline hasn't been fully reflected in TV advertising rates and revenues.
The broadcast networks have been able to remain the access points for the very large, mass, audiences, and have used that status that to push advertising rates higher (on a CPM, or per-viewer, basis). But the advertising industry is starting to push back, as some cable networks are reaching broadcast network viewing levels (for certain programs, at least) and mass advertisers are less willing to buy ads at inflated CPMs for programs with large proportions of delayed viewing. Analysts suggest that the broadcast networks will be unable to maintain all of the current premium CPM pricing in the long term.
The shift in audience viewing patterns is holding true for cable networks as well. While the decline in live viewing for cable networks has not been as precipitous as that of networks, they are subject to the same change in audience viewing behaviors. The impact on cable networks, however, is mitigated by the fact that many get the majority of their revenues from licensing/subscription fees. Those rates and prices are based on audience demand for access, rather than the number of viewers. Thus, while cable networks may take a hit on advertising revenues, the overall impact on revenues is lessened.
The relative stability of licensing/subscription revenues is encouraging broadcast networks and stations to explore, and try to exploit, that additional source of potential revenue. Licensing and subscription revenue levels have been increasing rapidly over the last decade or so, and are rapidly nearing the cross-over point - where the TV industry will earn more revenues from licensing than it will from advertising.
The last year has seen a number of retransmission consent battles between the broadcast networks and major MSOs - with the networks arguing that their licensing fees should reflect their audience levels. However, as noted earlier, licensing/subscription prices and revenues are based on audience demand for content, not on advertiser demand for audiences. And general-interest mass channels have relatively low overall values for their content, more competition, and more close substitutes, than the targeted niche cable networks. Licensing network access is not likely to generate the audience demand required to replace advertising losses - although the networks might find better success licensing specific programs rather than the network overall. (Particularly if the broadcast networks continue to distribute their content through free, over-the-air TV stations. Audiences are not likely to pay for network content when it's available over-the-air for free).
Increased licensing and subscription fees is already driving some viewers out of the traditional pay TV market. These "cord-cutters" are finding that online video sources and free over-the-air TV can provide the video content they desire at much lower cost that multichannel bundles. While the phenomenon is fairly new, studies suggest some 8% of the TV consumers have dropped all traditional pay sources (cable, DBS, etc.), another 15-20% have cut back on pay TV, going for smaller bundles of channels, and/or dropping Pay-TV services (like HBO) in favor of streaming video services (like Netflix).
The newest challenge for traditional multichannel systems is Dish's new SlingTV streaming video service, which bundles live streaming of 15 of the high-value cable networks and Video-On-Demand for just $20 month. (See earlier post on the subject). The SlingTV basic bundle is likely to prove to be a close substitute for basic multichannel bundles that cost 3-5 times as much, feeding the flurry of cord-cutting.
One analyst argued that the shift in audience TV viewing behaviors reflects a structural transition from ad-supported networks to streaming video services. It's certainly in progress, particularly among younger viewers. How long the transition will take, or how complete it will be, is still unknown. But the change is structural. The bad news for traditional TV services is that with a structural change, it is unlikely that viewers will return to old habits.
Sources - Broadcasters fear falling revenues as viewers switch to on-demand TV, ft.com (Financial Times)
BRUTAL: 50% Decline In TV Viewership Shows Why Your Cable Bill Is So High, Business Insider
CHARTS: Why Audience Ratings Have Collapsed For Cable TV Shows, Business Insider
The Evolution of TV: 7 dynamics transforming TV, ThinkWithGoogle white paper.
Evolution of TV: Reaching Audiences Across Screens, ThinkWithGoogle white paper.
A recent Morgan Stanley analysis noted that shifting viewing patterns have contributed to a 50% drop in broadcast network average "live" ratings over the last decade - the measure of audience that watched the initial live broadcast. While some of that decline has resulted from cable networks capturing various niche segments, more recent declines have resulted from the rise of time-shifting options. This has led the TV industry to push for a shift to other ratings measures that include delayed viewing - Live+3 (any viewing within three days of initial broadcast) and Live+7 (any viewing within a week). Underlying this has been a major shift in what ratings represent - from audience at a certain time, to audience for a specific program/episode. And created a problem for advertisers, as the delayed viewing options do not necessarily include the advertisements aired during the initial live broadcast.
The figure above shows that the decline hasn't been fully reflected in TV advertising rates and revenues.
The relative stability of licensing/subscription revenues is encouraging broadcast networks and stations to explore, and try to exploit, that additional source of potential revenue. Licensing and subscription revenue levels have been increasing rapidly over the last decade or so, and are rapidly nearing the cross-over point - where the TV industry will earn more revenues from licensing than it will from advertising.The last year has seen a number of retransmission consent battles between the broadcast networks and major MSOs - with the networks arguing that their licensing fees should reflect their audience levels. However, as noted earlier, licensing/subscription prices and revenues are based on audience demand for content, not on advertiser demand for audiences. And general-interest mass channels have relatively low overall values for their content, more competition, and more close substitutes, than the targeted niche cable networks. Licensing network access is not likely to generate the audience demand required to replace advertising losses - although the networks might find better success licensing specific programs rather than the network overall. (Particularly if the broadcast networks continue to distribute their content through free, over-the-air TV stations. Audiences are not likely to pay for network content when it's available over-the-air for free).
The newest challenge for traditional multichannel systems is Dish's new SlingTV streaming video service, which bundles live streaming of 15 of the high-value cable networks and Video-On-Demand for just $20 month. (See earlier post on the subject). The SlingTV basic bundle is likely to prove to be a close substitute for basic multichannel bundles that cost 3-5 times as much, feeding the flurry of cord-cutting.
One analyst argued that the shift in audience TV viewing behaviors reflects a structural transition from ad-supported networks to streaming video services. It's certainly in progress, particularly among younger viewers. How long the transition will take, or how complete it will be, is still unknown. But the change is structural. The bad news for traditional TV services is that with a structural change, it is unlikely that viewers will return to old habits.
Sources - Broadcasters fear falling revenues as viewers switch to on-demand TV, ft.com (Financial Times)
BRUTAL: 50% Decline In TV Viewership Shows Why Your Cable Bill Is So High, Business Insider
CHARTS: Why Audience Ratings Have Collapsed For Cable TV Shows, Business Insider
The Evolution of TV: 7 dynamics transforming TV, ThinkWithGoogle white paper.
Evolution of TV: Reaching Audiences Across Screens, ThinkWithGoogle white paper.
Friday, February 6, 2015
Mobile finally hitting TV, desktop usage
Penetration is one thing, and actual usage is another. A number of recent reports show distinct generational differences in both frequency of use, and in the types of applications and uses. Most of these reports, however, have yet to really establish that smartphone ownership and usage have had a serious impact on either TV viewing or Internet use on laptops or desktops.
The difference is enough that MBD's research director, Joline McGoldrick, indicated that online marketers are not only finding mobile as a growing segment of the advertising marketplace, but that marketers should take into account the emerging generational differences as well. Advertising placement on mobile is one of the fastest growing ad segments, with a 60% growth rate this year, and predictions that mobile will account for more than 20% of all ad revenues by 2018.
Source - Millennials Spend More Time With Mobile, Impacts TV Time, Mobile Marketing Daily
Tuesday, February 11, 2014
IAB: Metrics for Cross-Platform
Measuring passive audiences for one media platform is difficult enough - what about developing a metric that tries to measure interactive engagement and involvement across multiple platforms. A number of major research firms are working on the problem, lead by Nielsen (looking to expand broadcast ratings to online) and comScore (looking to extend online metrics to broadcast and print).
Overseeing these efforts is the Interactive Advertising Bureau (IAB), an advertising and marketing industry group, which is setting guidelines and standards that the industry wants any cross-platform and interactive audience metrics to incorporate before they will be adopted by the industry. The IAB has recently released a report setting out some basic definitions and outlining six broad goals and 30 core metrics that should be incorporated into proposals for industry-acceptable interactive advertising measures.
The goals recognize that it may be difficult, if not impossible, to build one single effective measure - still, core metrics need to be comparable to those used for other media, and have achievable benchmarks of objective performance. The report also stresses that social media encompasses more than a single form of engagement.
Determining what you want to know is (or at least should be) one of the first steps in research, and particularly in the development of reasonable and valid quantitative measures. Too many of the traditional metrics for traditional media were based on what could be easily measured rather than trying to measure the things that those using the metrics really wanted to know. It's good that the industry is thinking about what it really wants to know about interactive advertising exposure and effectiveness, and isn't rushing to adopt something this time (despite Nielsen's several attempts to jump the gun and get the industry to support it's product).
Sources - IAB Redefines Ad Engagement, Clarifies Core Metrics Cross-Platform, Media Daily News
Defining and Measuring Digital Ad Engagement in a Cross-Platform World, IAB report
The goals recognize that it may be difficult, if not impossible, to build one single effective measure - still, core metrics need to be comparable to those used for other media, and have achievable benchmarks of objective performance. The report also stresses that social media encompasses more than a single form of engagement.
Determining what you want to know is (or at least should be) one of the first steps in research, and particularly in the development of reasonable and valid quantitative measures. Too many of the traditional metrics for traditional media were based on what could be easily measured rather than trying to measure the things that those using the metrics really wanted to know. It's good that the industry is thinking about what it really wants to know about interactive advertising exposure and effectiveness, and isn't rushing to adopt something this time (despite Nielsen's several attempts to jump the gun and get the industry to support it's product).
Sources - IAB Redefines Ad Engagement, Clarifies Core Metrics Cross-Platform, Media Daily News
Defining and Measuring Digital Ad Engagement in a Cross-Platform World, IAB report
Wednesday, May 29, 2013
Research: "Audience Interactivity and Participation"
The EU has been funding academic research into the transformation of media, audiences, and their social implications under the COST Action ISO906 initiative. One of the working groups has published some initial findings on audience participation and interactivity in media. The white paper, "Audience Interactivity and Participation," summarizes interviews with practitioners in several areas - televised political programs, action theater, crowdfunding in music, fan production and interactivity in content, and a highly-interactive visitor's center associated with the EU Parliament.
Overall, the various interviews suggests some awareness of, and interest in, the potential that information technologies provide for promoting interactivity and participation in what had traditionally been unidirectional mass media. Thoughtful, if not terribly innovative or insightful - yet worth a read.
Source - "Audience Interactivity and Participation," Working Group 2, COST Action 906
Source - "Audience Interactivity and Participation," Working Group 2, COST Action 906
Friday, September 21, 2012
Shazam Expands to TV
For a while now, Shazam has offered an app that lets users tag the music they're listening to, as an aid in identifying songs and artists, keeping track of preferences, sharing music through social networks, and previewing and purchasing music. Shazam claims it connects 250 million people from 200 countries, in 33 languages, making it "the world's largest media engagement company.
Now Shazam has announced its entry into the world of TV.
Shazam works by using an archive of "sound fingerprints" to identify songs and programs; once something is tagged, Shazam identifies the content, and then offers access to other content and activities linked to it. Shazam has partnered with some specific TV shows and programming in the past, but full entry into TV was delayed while the company built up a library of "sound fingerprints" for TV and movie programming.
Tagging a program will identify the program if it's in the archive. Among the additional options for users tagging a show, can be things like accessing cast information and celebrity news, playing trivia, and engaging with other viewers on social media. And harkening back to Shazam's origins, it can also be used to identify the music being used within a TV program.
Shazam and similar apps seem like they'd be useful tools for active listeners and viewers, and for those who are looking for ways to engage with content and/or with friends and other fans of programs. But ultimately the key will be how well a particular app can correctly identify tagged program content, and the quality of the value-added extras offered through the app. It will likely be a while before its clear how successful these "companion" apps will be.
Source - Shazam Wants to Dominate the TV Market, and Here's How, The Wrap / promaxBDA daily brief
Now Shazam has announced its entry into the world of TV.
Shazam's chief revenue officer, Doug Garland was quoted as proclaiming “Now you can tag any show and what you’ll get back is a rich experience that gets you more engaged with TV programming, more invested with the show.“
Tagging a program will identify the program if it's in the archive. Among the additional options for users tagging a show, can be things like accessing cast information and celebrity news, playing trivia, and engaging with other viewers on social media. And harkening back to Shazam's origins, it can also be used to identify the music being used within a TV program.
“You’ll see people engage with a show while its on air, but I don’t necessarily think it’ll be in a way where you distract them from the show,” Garland said. “It’s a buzz tidbit, a mini content snack. You get more invested in the show the next time you watch.”The rise of "second-screen" and social TV viewing has created new opportunities for program producers, networks, and advertisers to provide a range of additional content or activities to interested viewers. Shazam, and similar services, offers a delivery system. And among "companion" apps, Shazam has scale and reach - currently adding an additional 2 million users a week, and a user base that generates around 10 million new tags a week.
Shazam and similar apps seem like they'd be useful tools for active listeners and viewers, and for those who are looking for ways to engage with content and/or with friends and other fans of programs. But ultimately the key will be how well a particular app can correctly identify tagged program content, and the quality of the value-added extras offered through the app. It will likely be a while before its clear how successful these "companion" apps will be.
Source - Shazam Wants to Dominate the TV Market, and Here's How, The Wrap / promaxBDA daily brief
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