CBS buys Last.fm: Analysis

You may have read recently that CBS has bought Last.fm for $280 million. The stated rationale being:

"$280 Million Acquisition Gives CBS One of the Largest Social Platforms with More Than 15 Million Active Users In More than 200 Countries."

Reading through the various press release, and related articles, I was expecting to hear something about The Copyright Royalty Board, but nothing. I also find it interesting that this deal closed now, and didn't wait a couple months to see the dust settle. That said, I have no doubt CBS did its due diligence and is aware of these threats. The deal emphasizes the social networking aspect of last.fm, and understandably so.

So, is this deal about radio, social networking, or both? Although it would appear to be about both, I don't hear much business banter about internet radio. What has hit a fevered pitch is social networking. Facebook is going crazy right now, and based on some of the API services their running now, this is the platform to beat (forget MySpace: Google, MSN, and Yahoo! watch your back). In fact, I just heard about this morning about a new service called iLike.com which is using the Facebook platform to help people find others with similar music tastes, based primarily on users iTunes library. It's a cool idea, and I wish them the best - same goes for Last.fm

But how relevant is social networking to radio? This has yet to be determined. For me, when it comes to radio, social networking still takes a back seat to the broadcasters and deejays themselves. Simply put, radio is a very very passive medium. It's not like collecting music where you're reading liner notes, and making decisions about what to buy, and how to organize it. It's not even all that much like television which is also pretty passive, where you can talk about an interesting episode of Lost, or who's going to get voted off of Idol.

For me (and according to most statistics I've read), radio is for the most part a pleasant distraction while we work, drive, exercise, go for a walk, or wake up in the morning. I've got my favourite stations, and yes I'll go out and look for others from time to time (thank you TUN3R.com ;) ). Of course friends can recommend good stations, and that no doubt will be something to watch for.

Maybe you'll see TUN3R.com on Facebook, in the very near future...

Stay TUN3D.

TUN3R now allows you to search Playlists

It's been a good week!
We've launched the radio playlist search feature at TUN3R.com, and will continue to expand on this. If you haven't had a chance to try it yet, go NOW! I can't tell you how many great stations I've been able to find with just this feature alone, and it's really really improved the audio browsing experience.

Basically, I can now enter the name of an artist and/or song title and the TUN3R Dial lights up all stations that play those tracks. When you move to that station on The Dial you can now see a large sample of tracks played over the few days, in addition to hearing a live audio sample from the station itself. In my opinion, this really separates the "wheat from the chafe". It's one thing to say you play "pop" or "alternative", but different people have vastly different views of what this means.

Now, if you just take a look at the playlist you can get a pretty clear idea of what the broadcaster is really all about, just by see the past played tracks, as well as hearing the audio sample. I've been literally spending hours on this thing and continue to find gold nuggets. I'm also amazed at how eclectic and varied Internet radio is compared to terrestrial FM radio.

For the first time, in a long time, I'm discovering music I actually like. I've always known that these awesome DJs are out there, but TUN3R has allowed me to pinpoint them.

Now, I should state my bias: I've always been a bit dissatisfied with the other "music discovery" services out there. Services like Pandora, Last.Fm, and Yahoo! Launch have failed to keep me hooked, and in a nutshell here's why:

1. I feel like I've got to constantly "teach" these services what I like. But when I'm listening to radio, I just want to kick back and relax. If a bad song comes on, I feel like I need to act quickly and tell the system that this is not what I want, otherwise the neural nets and genetic algorithms might get the wrong idea and God forbid, think I'm indifferent to the song. To stressful!
2. These systems haven't been able to find really really fresh new catchy material that I crave. Hey, I'm a sucker for a great pop hook, but I don't see how a computer algorithm can really differentiate between a genuinely awesome pop hook, and a kids tune from Miffy the Sweet Little Bunny. To be fair, I know that these systems use "the wisdom of the crowds" (also known as "the tyranny of the masses") to recommend music. That said, a cutting edge DJ will always be one step ahead of the crowds. I believe the technical term for what a good DJ is, is Opinion Leader.
3. Sometimes I like a bit of repetition in my radio. Sure it's nice to hear new stuff, but there are also those new songs that hit the market you're just craving to hear more of. Real DJs seem to get this intuitively.
4. I like the shared experience of listening to a broadcast and knowing that others are also partaking. It's the same reason I like going to movie theaters, live concerts, and even live sports (okay I'm not a huge sports fan). Super customized radio just doesn't give me that feeling, and there's nobody to talk about it with.
5. I simply like the idea of a real person spinning tunes, in the same way that I prefer playing video games with real people. For me it feels like there is more of a soul behind music. I see DJing as much of an art as it is a science.

We're still working on lots of improvements which you'll to wait to see, but so far I think TUN3R is practically everything I've wanted out of a radio search engine.

Since I love talking about music, feel free to drop me an e-mail at: neil@tun3r.com, and tell me what you think, and what stations you've found since playing with the newly upgraded Dial.

Tim Westergren of Pandora and John Simpson of SoundExchange face off in live debate

I was fortunate enough last night to have caught the live debate on Attack of the Show between Tim Westergren, founder of Pandora, and John Simpson, executive director of SoundExchange. The debate of course was about the fairness of the Copyright Ruling Board's ruling, and the future of internet radio.

Before I get into the analysis of what was said, I'll give you my basic impressions: Both speakers came off as civil, and articulate, and rarely spoke over each other or raised their voices. The moderator, Kevin Pereira, also did a good job of presenting questions from both sides (including questions solicited over the web from viewers). It's funny to note that most debates on CNN and other major media outlets are rarely this civil, so it's a breath of fresh air to hear a debate and then be able to weigh the arguments themselves as opposed to getting caught up in a juvenile shout-fest.

Now onto what was said, and my analysis:
Westergren framed the debate around the question of parity. He stated that satellite radio only pays 5% of their revenues to SoundExchange, but Pandora would have to pay at least %60 to %70 of their revenues. Simpson did not directly rebut this (and seemed to agree, but pointed out that satellite broadcasters would have to pay a larger percentage as their listenership increased), but brought up the fact that the judges involved in making the decision had poured over the financial records of numerous internet broadcasters, but due to the sensitive nature of these finances were obliged to keep this analysis protected, and therefore it's impossible to truly debate the numbers. I will repeat this in case you missed it: According to SoundExchange, the royalty payments that will possibly shut down internet radio are based on information that is a secret. While I'm sure the internet radio stations that were being scrutinized don't want their books exposed, would it not be possible to talk about numbers in aggregate? If there is no transparency to the underlying numbers, how can we be sure that the judges know how to correctly interpret them? This is disturbing, but also makes me wonder if the rest of the world would ever go along with this legislation based on current perceptions surrounding the Bush administration.

That notwithstanding, Simpson did bring up the valid point that internet radio plays fewer commercials, and overall simply has a lower revenue stream, so even though the percentages are higher, the overall revenue would be more on par. Okay, I think this is probably the best argument put forth, and does have merit. To be sure, a lot of internet radio stations are being run by enthusiasts with a genuine love of music who aren't looking to build the next media empire. In the eyes of RIAA, these folks are taking a free ride and must pay up. Okay, that's fine, but in order to fairly assess what the rates should be, shouldn't we have all the numbers on the table in some form?!? But of course that's all a secret, and we're back to square one.

When Simpson was asked about terrestrial radio's ridiculously low royalty payments, compared to both satellite radio and internet radio, Simpson agreed that they too should be taken to task, and should start paying their fair share. Uh huh. Well, I guess we'll just have to wait and see what secret numbers come up. Oh, and don't forget that terrestrial radio has been around longer than the recording industry, and likely has some pretty strong legal precedents. Folks: It ain't gonna happen.

On the topic of artist payments, Westergren pointed out that Pandora plays music from over 35,000 artists, of which 34,000 of those artists don't get airplay on mainstream terrestrial radio. Simpson retorted by pointing out that SoundExchange pays over 20,000 members across 2,500 labels. Ahh, now we get some numbers. So consider this: At the very best case, all of those 20,000 artists are on Pandora, and are getting some kind of compensation. What about the other 15,000 artists on Pandora that aren't? This just tells me that SoundExchange is not scaling to meet the needs of the industry. But I digress. The main point Westergren was making, is that for the true indie artists out there, internet radio is the only viable medium for getting heard, and I think that's hard to counter. Think about it: Satellite radio currently has about 100 stations. I figure FM radio can fit in 30 stations, and AM radio, another 20 stations. Given that we'll be going back to at most 200 stations, and realistically something like 20 stations to choose from, a major revenue stream for indie artists will be yanked away.

Which brings me to another point that Simpson made. Namely, Simpson stated that terrestrial radio, satellite radio, and internet radio are all different businesses and should therefore be treated differently. This is a pure rubbish argument which I'll address in more detail in a later post.

I was hoping to come away with a better understanding of the rationale behind the Copyright Ruling Board's payment rates, and certainly feel I'm better informed. However, what I learned about the secrecy of the process disturbed me. That said, I'm incredulous that this really is the case, so I'm going to keep digging.

I'll keep you posted.
-Neil.

Pandora battons down the hatches, Copyright Board delays fee collection

I was hoping to blog about why I think internet radio day has yet to come, but am instead writing about some interesting developments in Internet Radio news today.

Yesterday CNET news reported that the Copyright Payment Board will delay its collection of fees, pushing the date back to July 15th. In the meantime, the SaveNetRadio lobby will be working like gangbusters to change the legislation to create a more level playing field.

I'll be honest, I haven't read the full text of the rulings, so I'm not able to argue the finer points yet. Most of what I read about the legislation is coming from protesters (hey, I'll toss my hat into that crowd). What is clear to me is that traditional radio is being protected, and new net radio is being screwed with prohibitively high royalty fees. What is not clear to me is the reasoning behind this. Is this for political reasons (e.g. traditional radio runs a more effective lobby), or is there evidence that net radio and piracy are inextricably linked, and so net radio must pay the piper? I'd like to get to the bottom of these questions, and find out if the ruling is truly fact-based, or if this is just grandstanding at work. I'm also wondering if there are any loopholes to this ruling: On one side the prices are exorbant. However, on the other side, if I take the concept of internet radio to an extreme, could I not just in theory pay per-listen as opposed to per-song. In other words, instead of paying $0.99 to "buy" an iTunes song (which I'll probably have to buy all over again eventually due to changing formats). I could instead just buy 1,237 listens, or fewer? I have no idea.

Moving, on. Just today, CNET published this report that Pandora is shutting off access to non-US users. Well, users that know how to get around IP geolocation will still be able to access this service, but for the rest of us that don't live in the US of A (I'm in Canada), Pandora will be gone.

This represents the first major casualty of the [delayed] Copyright Payment Board ruling. I'm stunned by this announcement, but also wonder if it's a brave tactic to send a wake-up call to the CPB, that America's ability to compete internationally in the arena of internet radio has been greatly hobbled. There is also evidence of this in Michael Geist's (columnist for The Toronto Star) blog here. Where there's crisis, there's opportunity I guess.

As for Pandora itself. I will miss it. It's a great service, and does what it does very well. I don't really see it as a replacement to traditional DJ-centric radio, but it certainly fills a purpose.

For now though, our best bet is to push on, and try to bring some sanity to the CRB. If you live in the US, I urge you to contact your Member of Congress, and show your support for Internet Radio.