So who's adding revenue, and who's cannibalizing it? Here's what Universal Music Group's head of Digital Business Rob Wells had to say about Spotify and Pandora in a recent interview with Topspin CEO Ian Rogers. This is one of the top-ranked guys at the largest major label.
"I'm a fan of [Spotify's] model, I'm not just a fan of that company, although they're all great guys, they've got great tech, great engineering, I mean the Facebook integration is amazing. But I'm a fan of that model, and why am I a fan of that model? Because that's clearly what consumers - some consumers - want to do.
There's massive debate raging throughout the whole of the industry about does it cannibalize, what are artists doing holding back from these services...
...but what if it's incremental revenue and not cannibalistic revenue? So this is all additional money."
"The disappointing thing with Pandora is that it's a very dumb service, it's a very passive service. They kind of spoonfeed their consumers music...
...my view is they should have more to engage consumers especially in the opportunity of upsell. They need to bolt on something like a premium subscription service, and then it's interesting.
They're doing something right, but I don't think they're doing the music or the recording industry any favors by doing what they do. Yes they pass royalties, but if you ask any of the other business partners, who - with the exception of YouTube - who is cannibalizing their business, they'll probably turn around and say Pandora."
Comments Closed
Equity Monday, November 07, 2011
Of couse a head executive at a firm will speak in favor of a company in which his firm owns equity. I would guess that due to marketshare at the time the deal was inked, UMG owns a significant portion of Spotify.
I'm not questioning the veracity of his statement; it's just very difficult to view Rob as an objective source in the issue due to his/his company's financial interest in Spotify's success.
Visitor Monday, November 07, 2011
LOL... exactly... UMG owns an equity share in Spotify and they're desperately trying to get out with an IPO before their licenses come up for renewal...
PartlyCloudy Monday, November 07, 2011
I'll even one-up that one. Rumor is that Wells himself has equity in Spotify for driving the U.S. approval so of course he's gonna make all this BS up to cash out.
@BenjiKRogers Monday, November 07, 2011
Benji Rogers
They own part of Spotify right!
Cento75 Monday, November 07, 2011
I've discovered a lot (and I mean A LOT) of new artist thanks to Pandora. How can this be a bad thing? Spotify can't just do that, at least not now.
alden Monday, November 07, 2011
Oh no please not more Ian "Larry King" Rogers. Shouldn't he be more focused on making his start-up work?
blastjacket Tuesday, November 08, 2011
Tula Wednesday, November 09, 2011
Well said, these interviews do feature, on paper, interesting folks. But Rogers has to be one of the most painful people to sit and watch. If you are going to continue please choose somebody who actually has some camrea appeal and exepreince as an interviewer, this is obviolusaly not your forte.
Musi2k Monday, November 07, 2011
interesting read/watch!
Pandora is awful Monday, November 07, 2011
vested interest aside, he's not saying that about Spotify because the majors earn a nice chunk of equity (never hear the majors fawn over Rhapsody like that however) but he's exactly right. Pandora is a dumb service. The music that the music genome project historically encoded was a lot of unsigned , i hate to say it, crap.
It is a horrible music expeirence and I'm shocked that anyone who is clued in enough to read digital music news, would not feel that way.
It's middle america's idea of online music...if only they knew that Spotify, MOG or Rdio could be their pandora radio, but still play anything on demand, they'd drop Pandora in a minute.
Visitor Monday, November 07, 2011
Wake up people. Its nothing to do with vested interests in equity stakes- Spotify is a service that pays Universal and others a massive amount of money because they're *making* (not forecasting, predicting or praying for like most others) a massive amount of money.
Pandora licenses direct through collection societies therefore pay 50% direct to artist and 50% direct to label- which is not the 'traditional' split a major label gives artists. In addition, the rates Pandora pay are WAY lower than the per play rates on Spotify- 'on demand' streams cost a lot more than 'radio' streams.
With circa $200 million invested in Spotify so far, all of which is from very 'grown up' (read 'crafty') Venture Capital or Private Equity players, the simple fact is that labels aren't in it for a cashout on sale because there's unlikely to be one, and that sort of revenue is very hard to 'place'- believe it or not they can't just 'blackbox' tens of millions every year becuase artists/managers can and do audit them.
Final point, i find it *very* unlikely that Rob has a personal stake in Spotify...
Les Monday, November 07, 2011
Guy Nix Thursday, December 29, 2011
Jim Tuesday, November 08, 2011
It's not the ongoing royalty payments from spotify that make the majors warm and fuzzy, it's the huge up-front payments. They cashed out on a low-generating long-term model for huge up-front licensing fees. Typical small-mindedness, but the majors like the guys with deep pockets.
Visitor question Tuesday, November 08, 2011
English please, you are not making any sense. Write your thoughts down first, then read it, and edit for clarity.
HansH Tuesday, November 08, 2011
Ok Coldplay. Eat that! Additional money!
Need some sort of proof?
Check http://www.side-line.com/news_comments.php?id=46705_0_2_0_C
Sam@Projekt Tuesday, November 08, 2011
Pandora is cannibalizing sales.
@AUMikeG34 Tuesday, November 08, 2011
MG
interesting
Anyone know? Tuesday, November 08, 2011
What do the top 10 Spotify executives/employees make per month?
Food Tuesday, November 08, 2011
Interesting how Spotify is now forced to use its major label partners to attack Pandora. One would expect that it is not such a dangerous enemy to Spotify, since the Spotify scheme is heavily marketed by a few million tech blogs as...Jesus.
Pandora must be doing something that irritates Spotify. Is it royalties? Is it its database? Come on, tech bloggers, spill the beans. What's the catch?
gaetano Saturday, November 12, 2011
Kind of reminds me of how the Majors sent their best selling artists out as mouthpieces to rail against piracy... It's hard to take it seriously.
@jfedor Tuesday, November 08, 2011
Jeff Fedor
I think Rob Wells of UMG misses the point of Pandora, sometimes people want to be "spoonfed"
Payola Wednesday, November 09, 2011
The irony is that he and his peers know better than any indie artist what "spoonfed" means...
Visitor Monday, November 14, 2011
Exactly! Sometimes you just want good music playing in the background without having to design every playlist.
Hence the demand for all forms of radio, and for DJs in real-world venues. "Trust the DJ", as they say.
Pandora is an evolution of radio, not an evolution of the hi-fi stereo. Radio does not cannibalize sales, but can indeed promote sales. Spotify is effectively cannibalizing the stereo, however, that is, actual music sales.
- Versus
WWE Thursday, November 10, 2011
Is that Triple H heading up digital for UMG??
@ArsenalP Thursday, November 10, 2011
Marilyn Millions
Is Pandora hurting the music industry? Im personally all for Spotify!!
gaetano Friday, November 11, 2011
I will assume you're not trying to monetize, or value your own, or other's music in any way shape or form...
aminakis2 Saturday, November 12, 2011
Interesting how Spotify is now forced to use its major label partners to attack Pandora. One would expect that it is not such a dangerous enemy to Spotify, since the porn movies Spotify scheme is heavily marketed by a few million tech blogs as...Jesus.
Pandora must be doing something that irritates Spotify. Is it royalties? Is it its database? Come on, tech bloggers, spill the beans. What's the catch?
gaetano Monday, November 14, 2011
I think it's because Pandora, though not a huge profit generating machine, is an actual music discovery tool that functions more like an online radio station.
Spotify is trying to appear less as an on demand content streaming service, and more as a method of discovering new music.
Oh, and then there's the money.
Versus Monday, November 14, 2011
Spotify, not Pandora, is cannibalizing sales.
Pandora is primarily a music-discovery service. Speaking for myself, I only use Pandora to discover music. When I find something I like, I buy it, either on emusic, iTunes, or if I really love it, as a physical CD and/or vinyl.
Spotify, on the other hand, allows one to listen to entire albums of choice whenever one wishes. Why buy the album then? Only if one wants to be able to listen to the music away from their i-devices, or if one actually cares about sonic quality.
- Versus
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