Spotify Music Streaming Service Tops 100 Million Subs; Ups Fiscal Loss

SpotifyTechnology S.A. April 29 announced its branded music subscription streaming service reached 100 million paid subscribers in the first quarter, ended March 31.

That beat the previous-year period with 75.5 million paid subs. It also nearly doubled Apple Music with 50 million subs.

Average monthly users grew 26% to 217 million (which includes free ad-supported music users), slightly lower than the company’s 215-220 million guidance range.

“Outperformance was driven by a better promotion plan in the U.S. and Canada,” founder/CEO Daniel Ek and CFO Barry McCarthy said in a statement, alluding to a 23% price reduction ($12.99 to $9.99 monthly) for the “Spotify Premium + Hulu” promotion in the U.S.

McCarthy was Netflix’s CFO from 1999 to 2010.

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Spotify launched India in late February expanding its global market footprint to 79 countries. More than 1 million users signed up for Spotify in the first week in India. The company now has more than 2 million users in India.

Regardless, the streaming service reported an operating loss of €47 million ($52.4 million) on revenue of €1.5 billion ($1.67 billion), which was up 33% from revenue of  €1.1 billion ($1.22 billion) last year.

 The service, along with Pandora, Google and Amazon Prime Music, remains embroiled in a royalty dispute with songwriters.

Last month, the Register of the Copyright Office approved upping songwriters’ royalties from music streaming services from 10.5% to 15.1%  through 2022.

It was biggest rate increase granted in CRB history, according to the National Music Publishers’ Association.

Spotify & Co. are appealing the hike, claiming it “harms music licensees and copyright owners,” among other issues. Apple Music is not appealing the ruling.

Spotify Files Complaint Against Apple Music with European Commission

Spotify, the world’s largest music streaming service, has filed a complaint against Apple with the European Commission alleging the tech giant unfairly restricts competition against the Apple Music service.

Spotify ended its most-recent fiscal period with 87 million paid subscribers compared to about 50 million for Apple Music.

In a March 13 blog post, Daniel Elk, founder and CEO of Spotify, said Apple has changed the rules and stifled innovation how it operates the proprietary App Store. Elk argues that as Apple is both the owner of the iOS platform and the App Store — a competitor to services like Spotify, which gives the company an unfair advantage.

Specifically, Spotify takes issue with the 30% tax it and other digital services must pay utilizing Apple’s payment system. If the service opts out of the payment platform, Spotify alleges Apple restricts how it can communicate with its subscribers outside the app, in addition to limiting tech and user-enhancements.

“In some cases, we aren’t even allowed to send emails to our customers who use Apple,” Elk wrote.

The executive said apps should be able to compete fairly on their merits and not based on who owns the App Store. He said consumers should have a choice of payment systems and not be forced to use systems with discriminatory tariffs.

Elk said the App Store should not be allowed to control the communications between services and users, including allegedly placing unfair restrictions on marketing and promotions that benefit consumers.

“After trying unsuccessfully to resolve the issues directly with Apple, we’re now requesting that the EC take action to ensure fair competition,” he wrote.

 

 

 

Music Streaming Services Appealing Royalty Increase for Artists

Subscription streaming music services such as Spotify, Pandora, Amazon and Google are planning to appeal proposed royalty rate increases for artists finalized last month by the Copyright Royalty Board.

It marks the first time music distributors have appealed compensation rates to artists. Apple Music, the world’s largest streaming service with nearly 50 million subscribers, is not contesting the royalty hike.

The three-member CRB ruled last year — in a 2-1 vote — to increase artists’ share of streaming and record label revenue from 10.1% to 15.1% through 2022.

The streaming services and artists groups spent millions lobbying their sides of the debate. Spotify & Co. contend the decision to increase artists’ compensation involved “serious” procedural and “substantive” concerns.

“If left to stand, the CRB’s decision harms both music licensees and copyright owners,” the services said in a joint statement. “Accordingly, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the decision.”

David Israelite, CEO of National Music Publishers Association, criticized the streaming services for undermining the artists that drive consumer adoption.

“When the Music Modernization Act became law [in 2018], there was hope it signaled a new day of improved relations between digital music services and songwriters,” said Israelite. “That hope was snuffed out today when Spotify and Amazon decided to sue songwriters in a shameful attempt to cut their payments by nearly one-third.”

 

 

 

 

 

Trump Signs ‘Music Modernization Act’, Easing Legal Requirements for Streaming Services

Lost in the haze of President Trump’s Oct. 11 bizarre news conference with rapper Kanye West, was the president signing into law the Music Modernization Act, passed unanimously by Congress in September.

Officially known as the “Orrin G. Hatch – Bob Goodlatte Music Modernization Act of 2018,” the legislation simplifies the “mechanical license” required for “musical composition” (music and lyrics) and sound recordings from record labels played on subscription music streaming services such as Spotify, Apple Music, Pandora and Amazon Prime Music, among others.

Before passage of the law, streaming music services were required to complete license forms for each song placed on their platforms – upwards of 10,000 titles per day.

Now, a new licensing agency will be established within the U.S. Copyright Office offering music services a blanket mechanical license to stream content. The agency will keep track of music streams and in turn pay royalties to rights holders.

The bill also allows for royalties to artists and songwriters for songs written prior to 1972. It also, for the first time, will afford compensation for a song’s producer played on satellite radio and online music service.

“There’s a lot more that needs to be done here,” said Kid Rock, who attended the bill’s signing. “We need to go after the record labels next, and things like free goods. But this is a great start to protect songwriters, producers, engineers — the unsung heroes behind many of these songs that go out there. People like [me], who are maybe more at the top of the food chain, it really doesn’t affect as much. But I know many people it does affect.”

Amazon Music Expands Service in Canada

Amazon Sept. 26 announced the launch of Amazon Music Unlimited in Canada, featuring voice-activated controls by Alexa.

Amazon launched Prime Music in 2016, with Canadian service bowed in 2017. Amazon Music Unlimited affords users access to millions of more songs and artists on the Amazon Music app for iOS and Android, and on all Echo devices.

Amazon Music Unlimited is available to all customers, offering even more music and ways to ask for it through Alexa. Users have the ability to ask for music on any Alexa-enabled device, including through the Amazon Music app for iOS and Android, by mood, era, genre and title.

Users can also request a playlist based on activity, set music alarms to wake up to, build and add a song to a new playlist just by asking, or return to a song they were listening to earlier in the day. With hands-free listening in the Amazon Music app, users can simply ask Alexa to play music, anywhere they go.

Available in more than 40 countries, Amazon Music offers ad-free access to the newest music from artists such as Ariana Grande, Drake, Arkells, Shawn Mendes and Carrie Underwood, among others, with unlimited playback and skips.

In addition to a range of locally curated playlists and stations featuring international chart-topping artists, from “Brand New Music” to “All Hits,” Amazon Music Unlimited offers numerous playlists and stations featuring Canadian artists from all genres including Cœur de pirate, Celine Dion, The Weeknd, Blue Rodeo and Jessie Reyez. Subscribers can also find the best in top genres, from Tory Lanez on “Fresh Hip-Hop” to The Reklaws on “Fresh Country,” as well as explore a range of globally available playlists, including “Pop Culture,” which spotlights the latest pop music releases.

Amazon is offering new Prime subscribers a free 90-day trial for a variety of plan options, including the standard Prime member price of CDN$7.99/month or CDN$79/year, the individual plan for non-Prime members at CDN$9.99/month; the family plan, which allows up to six members of a household to share a subscription for CDN$14.99/month for Prime and non-Prime members, or CDN$149/year for Prime members; the single device plan, offering full access to Amazon Music Unlimited at CDN$3.99/month on one Echo device, including the recently announced Echo Dot, Echo Plus, Echo Show and more.

“We’ve seen such a positive customer response from the launch of Prime Music for Canada last year, and with today’s launch we’re excited to bring more customers even more choice and ways of discovering music with Alexa,” Sean McMullan, head of international expansion for Amazon Music, said in a statement.

Apple Completes Shazam Music Recognition App Acquisition

Apple Sept. 24 announced it has finally completed the acquisition of Shazam, a highly-rated music app that enables users to recognize a song playing around them after hearing a few notes. The app has been downloaded more than 1 billion times.

Financial terms of the deal first revealed last December were not disclosed, although media reports pin the transaction around $400 million. It marks Apple’s biggest acquisition since the 2014 purchase of Beats for $3 billion.

“Apple and Shazam have a long history together,” Oliver Schusser, VP of Apple Music, said in a statement. “Shazam was one of the first apps available when we launched the App Store and has become a favorite app for music fans everywhere.”

The app – which was reportedly coveted by Spotify and Pandora – will soon be offered ad-free to users, according to Apple. How the tech giant plans to monetize Shazam remains to be seen.

Shazam says users employ the app more than 20 million times each day – yet the technology has reportedly never been profitable despite enabling users to discover, interact with and share video, audio or printed content across devices and mediums.

Online music has become a hot market with Apple Music recently edging ahead of Spotify with more than 20 million paying subs. In May, CEO Tim Cook said Apple Music was approaching 50 million users when combining free and paid subs.

Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, the company has transformed consumer technology with the iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, macOS, watchOS and tvOS — provide seamless connectivity across all Apple devices and services, including the App Store, Apple Music, Apple Pay and iCloud.

SiriusXM Radio Acquiring Pandora for $3.5 Billion

Mega media mergers aren’t limited to video anymore.

Satellite radio operator SiriusXM and subscription streaming music operator Pandora Media Sept. 24 announced a deal under which SiriusXM will acquire Pandora in an all-stock transaction valued at about $3.5 billion.

The transaction, which has been approved by both the independent directors of Pandora and by the board of directors of SiriusXM, creates the world’s largest audio entertainment company, with more than $7 billion in expected pro-forma revenue in 2018.

The transaction is expected to close in the first quarter of 2019. It is subject to approval by Pandora stockholders, in addition to passing mustard with U.S. and foreign antitrust issues and regulations.

“We have long respected Pandora and their team for their popular consumer offering that has attracted a massive audience and have been impressed by Pandora’s strategic progress and stronger execution,” Jim Meyer, CEO of SiriusXM, said in a statement. “We believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses.”

Pandora’s more than 70 million monthly users would enable SiriusXM to significantly expand its presence beyond its more than 36 million subscribers across North America vehicles into the home and other mobile areas.

Leveraging SiriusXM’s exclusive content and programming with Pandora’s ad-supported and subscription tiers could create unique audio packages, while also utilizing SiriusXM’s extensive automotive relationships to drive Pandora’s in-car distribution.

“We’ve made tremendous progress in our efforts to lead in digital audio,” said Roger Lynch, CEO of Pandora. “Together with SiriusXM, we’re even better positioned to take advantage of the huge opportunities we see in audio entertainment, including growing our advertising business and expanding our subscription offerings.”

Pursuant to the agreement, the owners of the outstanding shares in Pandora that SiriusXM does not currently own will receive a fixed exchange ratio of 1.44 newly issued SiriusXM shares for each share of Pandora they hold. Based on the 30-day volume-weighted average price of $7.04 per share of SiriusXM common stock, the implied price of Pandora common stock is $10.14 per share, representing a premium of 13.8% over a 30-day volume-weighted average price. The transaction is expected to be tax-free to Pandora stockholders. SiriusXM currently owns convertible preferred stock in Pandora that represents a stake of approximately 15% on an as-converted basis.

The merger agreement provides for a “go-shop” provision under which Pandora and its board may potentially enter negotiations with parties that offer alternative (i.e. more lucrative) proposals. Pandora said it does not intend to disclose developments about this process unless the board acts on any superior bid.

“The addition of Pandora diversifies SiriusXM’s revenue streams with the U.S.’s largest ad-supported audio offering, broadens our technical capabilities and reach out of the car even further,” Meyer said.

 

Dish Debuts Google Assistant Voice Control

Dish July 9 debuted its integration with the Google Assistant for a hands-free TV entertainment experience.

Dish customers with a Hopper, Hopper Duo, Joey or Wally can control their TV using their voice when paired with an Assistant device, such as Google Home, Android phones or iPhones.

Dish is the first pay-TV provider to offer direct compatibility with the Assistant.

“Since we first introduced voice control technology, we’ve seen our customers really embrace the hands-free TV experience,” said Niraj Desai, Dish VP of product management, in a statement. “Our collaboration with Google is an exciting opportunity for us to continue meeting demand for voice and changing the way we interact with television.”

“We want to make it easy and fun for people to turn their living room into a smart entertainment center with the Assistant,” said Michele Turner, senior director, Google Smart Home Ecosystem, in a statement. “By working closely with Dish, we’ll ensure that customers can easily control their TVs through the Assistant, instead of searching for or having to share the remote.”

Customers can ask the Assistant to set recordings, adjust volume and launch apps such as Game Finder, Netflix and Pandora. Customers can also use the Assistant to navigate, play, pause, fast-forward, rewind and search content based on channel, title, actor or genre. When using search functionality, the results displayed include Dish’s live, recorded and on-demand titles, as well as Netflix’s selection of TV shows and movies.

Spanish-language support will be coming soon, according to Dish.

Comcast Begins Streaming SlingTV International on X1 Set-Top Devices

As expected, Comcast has begun offering Xfinity subscribers direct access to Sling TV’s multicultural programing.

First announced last November, the agreement between the nation’s largest cable operator and satellite operator Dish Network (which owns Sling TV) underscores Comcast’s expansion beyond its walled pay-TV ecosystem. The cabler currently offers direct-access to Netflix, Pandora, YouTube and NPR podcasts.

“And today, we’re excited to add another choice to the platform with the launch of the Sling International app on X1,” Rebecca Simpson, executive director international strategy and programing at Comcast Cable, wrote in an April 5 blog post.

Sling International offers multicultural content from different countries in 21 languages starting at $10 per month.

Available languages include Arabic, Hindi, Tamil, Telugu, Malayalam, English, Marathi, Kannada, Punjabi, Urdu, Bangla, Bengali, Brazilian, French, Italian, German, Polish, Vietnamese, Cantonese, Taiwanese and Mandarin.

Existing Sling TV customers will be able to log in and access any of the international live or on-demand programming that’s part of their current package.  New customers will be able to sign up directly through the Sling International app on X1 at www.sling.com/international.