Media Audit Study Confirms Social Networking Continues Its Rapid Growth

 

 

April 25, 2013 at 6:16 AM (PT)

Read more: http://www.allaccess.com/net-news/archive/story/117770/media-audit-study-confirms-social-networking-conti#ixzz2Ra3jdHrS
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Preliminary findings from THE MEDIA AUDIT's soon-to-be released 2012 National Report highlights that popular social media websites such as FACEBOOK, TWITTER and LINKEDIN are continuing to increase in their popularity. According to the study, 61.6% have now visited these websites with the past month. The figure represents more than 89 million monthly unique website visitors across 105 markets measured by THE MEDIA AUDIT.

The figure, when compared to last year's 58.5% who visited these sites represents another 5.3% gain in only a year.

Among those 89 million monthly unique website visitors, 83.4 million have visited FACEBOOK within the past 30 days, suggesting FACEBOOK is still king when it comes to social media websites. In 2011, 54.7% of all adults had visited the popular social media website, compared to 57.5% in 2012, resulting in a 5.1% gain for the year.

Within the same time frame, LINKEDIN grew from 15.7% in 2011 to 17.6% in 2012 who had visited the website with the past 30 days, representing a 12% gain. The resulting figure represents more than 25 million who logged on to the social media networking site aimed at reaching business professionals.

The percent who visited TWITTER grew by the greatest percent within the same period. According to the report, those who visited TWITTER in the past 30 days grew from 12.4% in 2011 to 14.4% in 2012, the latest figure representing a 16% growth.

As time spent surfing the Internet in a typical day continues to grow, THE MEDIA AUDIT suggests, "it may be likely many of these social media websites are helping to fuel these increases. According to the same study, social website users spend 7% more time in a typical day surfing the Internet when compared to the general population. Today, 18.8% of a social media website user's typical day exposed to all media such as radio, TV, newspaper, and billboards, is spent surfing the Internet. Furthermore, 44.5% of all social media website users are considered heavy Internet users, spending more than three hours per day surfing the web, a figure that is 31% higher when compared to typical web usage among the general population.  Among all U.S. adults, 33.8% are considered heavy Internet users."

Read more: http://www.allaccess.com/net-news/archive/story/117770/media-audit-study-confirms-social-networking-conti#ixzz2Ra3eLoG8
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For the First Time Ever, Song Downloads Are Declining In the US...

 

 

Wednesday, March 20, 2013
by  Paul Resnikoff

That's according to a major industry executive source, who agreed to share early-2013 paid download stats with Digital Music News this morning.  The preliminary year-over-year tallies show that a-la-carte download sales are down on the year, for the first time ever.  "It's down about three percent [year-over-year]," the source relayed, while offering to spill more details over the next few days.  "That's a first."    

The symbolism is dramatic, though numbers-wise, this isn't completely out of the blue.  Last year, download singles were up 5.1 percent, to a record 1.336 billion units (again, US-specific).  The year prior to that (2011), digital track sales gained 8.5 percent to a then-record 1.271 billion units.  Both of those are single-digit gains, with a clear move towards the present decline. 

Digital album sales are still up on the year, also according to the source.  But the base (or denominator) for those gains is much smaller, which means that percentage gains are predicated on far smaller absolute gains.  That said, the rate of increase is also slowing on albums, according to the source. 

Last year, broader album sales (physical+digital) slipped a modest 4 percent on the year, according to stats published by Nielsen Soundscan.

So, is this officially the beginning of the streaming era, and the end of the download era?  The 2013 sales story on downloads is obviously still unfolding, though the development follows significant surges in subscription and streaming adoption, particularly from the likes of Muve Music, YouTube, Pandora, and Spotify (across both free and paid).  

Still, this may be more about the limitations of downloads and digital sales in general, and less about the relative strength streaming.  "[Spotify CEO] Daniel Ek [just revealed] 6 million subscribers, but 6 million subscribers compared to the 400 million credit card-linked accounts in iTunes, it's just a drop in the ocean," analyst Mark Mulligan told an audience at SXSW last week.

Let's see. 

Add Up Every Song Played. On Every Platform. And This Is What It Looks Like...

 

 

Tuesday, April 02, 2013
by  Paul Resnikoff

This is based on a just-released report by NPD Group, one that specifically looks at where people get their music.  And, how much music is played across what platforms.  The survey results, which are specific to the 13-35 year-old demo in the US, look like this. 

Above 36, and things start to change dramatically.  NPD found that 41 percent of listening in the older bracket happens through AM/FM radio, with far less excitement around digital platforms.  

Back among the 13-35s, the shift is underway, with the car a major warzone ahead.  "Six out of 10 consumers (62 percent) between the ages of 13 and 35 who used streaming services used these services more than they had in the past," the report indicated.  "And 51 percent reported that most of their music listening was in their cars."

STREAMING DIGITAL MUSIC ROYALTIES TOP RADIO REVENUES FOR FIRST TIME IN U.K.

 

 

AHEM, U.S. MUSIC LABELS! ARTISTS ACROSS THE POND ARE MAKING MORE ONLINE THAN ON AIR.

BY: KIT EATON

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Royalties earned from digital music services in the U.K. have beaten licensing revenues from radio broadcasts for the first time, the nation's Performing Rights Society has revealed.

New agreements with Google Play, Microsoft Xbox, and new entities like Spotify have contributed to a 32.2% growth in digital income compared to 2012. This means that digital music sources like iTunes, online streaming services, and the like are likely the main national source of recurring income for British music acts, since the PRS notes these revenues have also surpassed those earned from live performances. International licensing, thanks to the potentially greater market size, still dwarfs national licensing.

The digital music streaming game is exploding right now, underscored by Facebook's recent moves to more prominently integrate services like Spotify and Rdio into its users' timelines. But Spotify's expansion from its U.K. home was famously held up for years due to inflexibility in the U.S. record industry. Apple itself, the king of digital music downloads, struggled with U.S. labels for years, and has still to launch its own fully streaming music service.

[Image: Flickr user James Cridland]

INFOGRAPHIC: The Mobile Advertising Ecosystem Explained

 

Business Insider | 38 minutes ago | 88 |

We are in the post-PC era, and soon billions of consumers will be carrying around Internet-connected mobile devices for up to 16 hours a day. Mobile audiences have exploded as a result.

So, mobile advertising should be a bonanza, right? Not exactly. It has been a bit slow off the ground, and its growth trajectory is not clear cut. Part of the reason is that the mobile ad ecosystem is not as strictly delineated as the desktop ecosystem. In mobile advertising, the rules of the road change with different combinations of device, wireless operator, and operating system.

In a recent report from BI Intelligence on, we explain the complexities and fractures of the ecosystem. We specifically examine the central and dynamic roles played by mobile ad networks, demand side platforms, mobile ad exchanges, real-time bidding, agencies, brands, and new companies hoping to upend the traditional banner ad.

Access The Full Report And Data By Signing Up For A Free Trial Today >>

Take look at this infographic from our report:

Mobile lacks the technical consensus that enables ad targeting, delivery, and measurement to work fairly seamlessly across the desktop world. As the mobile ad industry matures it will likely become more streamlined and simple, but for now there are innumerable actors interacting with one another and attempting to find a niche.

Here's an overview of some of the major players in the ecosystem:

• Mobile ad networks: Mobile ad networks aggregate advertising inventory and match it with advertisers, much as online ad networks do. Networks soak up ad inventory, analyze its potential, and sell it by matching it to advertisers' needs. Where networks differentiate is in value-added services, such as aggregating buying power to strike better deals, or improve targeting.
• Mobile ad exchanges:  Exchanges automate many parts of the mobile ad process, and can connect publishers with multiple ad networks. Ad exchanges are primarily supply-facing at the moment, and have relatively few interactions with mobile ad agencies (even less so with brands).
• Natives: Other companies are emerging that don't neatly fit the established categories. They resemble ad networks in that they connect advertisers with publishers' inventory, but they express disdain for the traditional mobile advertising model.These companies are trying to find a native approach to mobile advertising that will break through consumers' apparent disdain for mobile ads. We call them "the natives."

Read more: http://www.businessinsider.com/infographic-the-mobile-advertising-ecosystem-explained-2013-44#ixzz2RVJMDmej

Why Marketers Need to Reorganize Around the Most Powerful Behavior Principle of All: Utility

 

By 5047
Published: April 17, 2013

http://adage.com/print/240860

FRED PFAFF

ART CANNON

The word cloud of marketing change bombards us with new tactical imperatives almost daily -- in targeting, engagement, commerce, community and mobile. Each of these silos is so complex it's spawned its own industry, and the complexity causes a lot of disjointed marketing efforts.

To plan a more complete response to the new world, marketing needs to reorganize around its unifying principle: utility.

Why?

We've crossed the Rubicon in smartphone adoption (54% mobile-market penetration, per the latest ComScore figures). Holding the world in your palm changes expectations, and those expectations raise the bar on marketing. Marketing will be judged by how useful it is, now that we have an unprecedented infrastructure of delivery and activation.

As consumers, we're gravitating instinctively to that which saves us time, deepens our experience, widens our connection, gives us more control or increases our social capital.

The more we do, the more we expect.

Above all, utility is a response to, and a requirement of, the inevitable time crunch in a tech-sped world.

Think about it.

When's the last time you clipped articles and notes, put them in paper files, and then went comparing products a week later? Thought so. Instead, you do it all within minutes by clicking links.

Utility, however, imposes a higher responsibility on marketing and a corresponding shift in mind-set and execution. In particular, it introduces a product focus to branding and a direct-marketing discipline to media.

Nike Fuel Band goes well beyond shoes and clothes.

Advertising giants built the brand business on sentiment, which falls short in an age where I want to do something. Marketing can't just communicate your ethos anymore; it has to deliver access to your brand through mechanisms that let people experience the value in everyday life. That means the brand job only starts at aspiration and has to incorporate a range of technologies for realization.

That's why Nike Fuel Band wasn't just the innovation of the year; it's the first full-utility footprint. Adidas recently bet its stack on Energy Boost, an energy-return system for sneakers, but there's no way it will close the gap. Adidas remains stuck on the sole of the shoe, whereas Nike has engineered a system for the soul of the athlete. For Adidas, the work is done once you've laced your shoes. For Nike, the work is done when you're a new person (and they know and support you like no brand ever has).

A similar systemic construct reframes media. Media has always been perceived as being part of an activation chain. Now it has to be the chain, and we have to prove it.

Utility also requires replacing the chain of faith with a chain of actions. We need to plan and monitor how our messaging bounces along the stream of consumer interaction, and through the path of commerce. For example, retargeting extends utility to display advertising, and smartphone point-and-shop apps (e.g. WiO and Shazam) start to fulfill on the commercial potential of interactive TV.

Branded content brings utility to advertising when it gives the audience things to join, support, buy, etc. Links, QR codes, test plans, personalized minisites and deals all raise the bar on what's not only on offer, but also what's measureable within that offer.

We're conditioning ourselves to act with our new media-delivery systems, so we expect interconnectivity with a click. The message to marketers: Your content needs to let me activate on my terms.

Utility also means we need to understand consumer behavior after seeing ads, not just before. The weight of marketing research has been on targeting. Now we need to create the lens for the complete activation spectrum.

No particular kind of agency owns utility or the marketing experience it creates. That's an opportunity for service providers and a reason for client marketing teams to step up. Somebody has to lead the team, and more than likely it'll be the client once again.

And that's not a bad thing. Much as many agencies have gotten into the habit of outsourcing thinking to media via the RFP ("Tell us your best ideas for our business"), many clients have played the same game with the growing cadre of agency hybrids. Getting to a central organizing principle -- the shape of the utility spectrum a brand aims to manifest -- is the first bold step toward making all the pieces work together, and creates a common ground for media, advertisers and marketers.

That just might be the highest responsibility a client CMO has today. Marshal agencies around what matters and set requirements -- from the questions we ask to the utility of the constructs we create -- that bring order to the chaos. Done right, utility turns the escalating speed of consumer reaction to a brand's advantage.

ABOUT THE AUTHOR

Fred Pfaff is president at Fred Pfaff Inc (fredpfaffinc.com). Art Cannonis lead strategist at Fred Pfaff Inc.

Copyright © 1992-2013

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THE SMALL SCREEN CAPTURED BIG AD REVENUE IN 2012

 

MEDIA AND ENTERTAINMENT| 04.18.2013

http://www.nielsen.com/us/en/newswire/2013/the-small-screen-captured-big-ad-revenue-in-2012.html

108

Advertisers gravitated to the small screen in 2012 and pulled away from newspapers and magazines, according to Nielsen’s quarterly Global AdView Pulse report. The $350 billion in global TV ad spending represented a 4.3 percent year-over-year increase, and a strong second half in North America contributed to a 3.2 percent rise in global ad spending for the year. Overall, TV ad spending accounted for 62.8 percent of global ad dollars in 2012.

Ad spending in print mediums other than magazines and newspapers did rise in 2012, but the percentage increases trailed those in the TV realm. While spending in newspapers and magazines dipped for the year (-1.6 and -0.2 percent, respectively), these mediums remain key ways for advertisers to communicate with consumer, as they maintained the second and third place spots based on share of overall ad spend. Newspapers accounted for nearly 20 percent and magazines accounted for 8 percent, proving that they remain major mediums for advertisers to communicate with consumers.

Display Internet advertising, although measured in a smaller subset of countries, grew 9.9 percent in 2012. Latin America played a noteworthy role in the increase, as Internet ad spend in this region jumped 21.2 percent for the year. The 7.4 percent annual increase in Internet advertising in Europe was also noteworthy, given the region’s current economic situation.

Cinema ad spend continued to climb each quarter throughout 2012, which helped the sector see a spike of nearly 6 percent for the full year. While cinema spending remains relatively small, accounting for just 0.3 percent share of ad spend, regions like Europe (7.4% increase YOY) and Asian Pacific (10.3% increase YOY) continue to contribute to the medium’s growing importance among advertisers looking to reach theatre-going consumers.

“With 63 percent of ad dollars being spent to advertise on TV, it’s clear that the medium is widely regarded as the most efficient and effective way to reach consumers, continuing to grow especially in emerging markets,” said Randall Beard, Global Head, Advertiser Solutions for Nielsen. “As we move into 2013, we’ll be monitoring which regions, sectors and media types continue to drive global advertising, and which emerge and propel the industry to new heights.”

METHODOLOGY

Nielsen Global AdView Pulse measures ad spending for TV, newspapers, magazines, radio, outdoor, cinema and Internet display advertising. . Ad spend is based mainly on published rate-cards.  Some markets may exclude select media due to data availability.

The external data sources for the other countries included in the report are:

Argentina: IBOPE

Brazil: IBOPE

Croatia: Nielsen in association with Ipsos

Egypt: PARC (Pan Arab Research Centre)

France: Yacast

Greece: Media Services

Hong Kong: admanGo

Japan: Nihon Daily Tsushinsha

Kuwait: PARC (Pan Arab Research Centre)

Lebanon: PARC (Pan Arab Research Centre)

Mexico: IBOPE

Pan-Arab Media: PARC (Pan Arab Research Centre)

Portugal: Mediamonitor

Saudi Arabia: PARC (Pan Arab Research Centre)

Spain: Arce Media

Switzerland: Nielsen in association with Media Focus

UAE: PARC (Pan Arab Research Centre)

GLOBAL AD SPEND GROWS 3.2% IN 2012

 

MEDIA AND ENTERTAINMENT| 04.11.2013

422

2012 closed out on a positive note for the ad industry: globally, ad spend increased 3.2 percent year-over-year to $557 billion, according to Nielsen’s quarterly Global AdView Pulse report. A strong third quarter, which saw growth of 4.3 percent, helped drive the annual uptick. Ad spend growth then receded to a more modest 2.5 percent in the fourth quarter.

All regions except Europe increased their ad spending in 2012. The Middle East/African market showed impressive growth of 14.6 percent for the year as the region’s economy stabilized. Egypt was part of that turnaround, registering a 20.4 percent increase in spending. Meanwhile, deep cuts to ad budgets continued in Europe, fueling a 5.3 percent decrease for the final quarter, yielding an annual decrease of 4.2 percent. Even economic powerhouse Germany reported a 1 percent dip in the fourth quarter, the second consecutive quarter the country reported a decline in advertising spend.
The Asian-Pacific market underperformed as well, as its annual increase in ad spend fell from 11.5 percent in 2011 to a mere 2.8 percent in 2012, propelled in part by China’s very slight gain of 1.9 percent for the year.
Ad spending in North America remained on an upward trajectory at the end of the year, climbing 3.1 percent in the fourth quarter. This helped the region report 4.6 percent growth for the full year.

METHODOLOGY

Nielsen Global AdView Pulse measures ad spending for TV, newspapers, magazines, radio, outdoor, cinema and Internet display advertising. Ad spend is based mainly on published rate-cards. Some markets may exclude select media due to data availability.
The external data sources for the other countries included in the report are:
Argentina: IBOPE
Brazil: IBOPE
Croatia: Nielsen in association with Ipsos
Egypt: PARC (Pan Arab Research Centre)
France: Yacast
Greece: Media Services
Hong Kong: admanGo
Japan: Nihon Daily Tsushinsha
Kuwait: PARC (Pan Arab Research Centre)
Lebanon: PARC (Pan Arab Research Centre)
Mexico: IBOPE
Pan-Arab Media: PARC (Pan Arab Research Centre)
Portugal: Mediamonitor
Saudi Arabia: PARC (Pan Arab Research Centre)
Spain: Arce Media
Switzerland: Nielsen in association with Media Focus
UAE: PARC (Pan Arab Research Centre)

AD SPEND BY SECTOR: CONSUMER GOODS AND TELECOM TAKE THE CAKE IN 2012

 

http://www.nielsen.com/us/en/newswire/2013/ad-spend-by-sector--consumer-goods-and-telecom-take-the-cake-in-.html

MEDIA AND ENTERTAINMENT| 04.25.2013

NEW

While global advertising spending increased overall in 2012, not all sectors reaped the benefits. The telecommunications, consumer goods and media sectors saw the biggest increases, earning year-over-year jumps of 7, 6.8 and 5.8 percent, respectively, according to Nielsen’s quarterly Global AdView Pulse report. Comparatively, former top performers like healthcare and durables saw reduced spending for the year.

TELECOMMUNICATIONS

Although telecommunications continued to experience the most significant growth (7%) in ad spend in 2012, this sector remains relatively low in the ranks based on share of total advertising spend, falling into the seventh spot of 11 categories. With markets like Latin America and the Middle East and Africa toting double-digit growth (35.6 and 13.2 percent respectively), this sector appears poised to move up in the ranks in 2013.

FAST-MOVING CONSUMER GOODS (FMCG)

FMCG follows closely behind telecommunications, posting a strong year-over-year increase of 6.8 percent on the heels of a 9.5 percent ramp-up in fourth quarter spending. These increases and the sector’s long-standing position as leader based on share of ad spend (25.1%) illustrate the crucial role that FMCG plays in driving advertising spend globally.

AUTOMOTIVE

Automotive advertising spend slipped in the fourth quarter (down 2.8% compared to Q4 2011), resulting in modest growth of 3.4 percent for 2012. The sector ranks fifth based on its 7.8 percent share of global ad spend.

ENTERTAINMENT

Entertainment, the number two sector based on share of global ad spend, falls very closely behind automotive based on percent change in ad spend for the year. Despite a nominal 3.1 percent year-over-year increase, it’s nearly 12 percent (11.8%) share proves the category is a major player in the global advertising industry and that entertainment companies are continuing to invest.

METHODOLOGY

Nielsen Global AdView Pulse measures ad spending for TV, newspapers, magazines, radio, outdoor, cinema and Internet display advertising. Ad spend is based mainly on published rate-cards. Some markets may exclude select media due to data availability.

The external data sources for the other countries included in the report are:

Argentina: IBOPE
Brazil: IBOPE
Croatia: Nielsen in association with Ipsos
Egypt: PARC (Pan Arab Research Centre)
France: Yacast
Greece: Media Services
Hong Kong: admanGo
Japan: Nihon Daily Tsushinsha
Kuwait: PARC (Pan Arab Research Centre)
Lebanon: PARC (Pan Arab Research Centre)
Mexico: IBOPE
Pan-Arab Media: PARC (Pan Arab Research Centre)
Portugal: Mediamonitor
Saudi Arabia: PARC (Pan Arab Research Centre)
Spain: Arce Media
Switzerland: Nielsen in association with Media Focus
UAE: PARC (Pan Arab Research Centre)

Google Grabs Social Sign-In Share

http://www.emarketer.com/Articles/Print.aspx?R=1009830

Apr 22, 2013

Facebook still leads overall

Facebook continues to hold a substantial lead in worldwide social sign-ins, according to Q1 2013 data from user management platform provider Janrain, but Google is successfully gaining a greater share of these important consumer touchpoints.

Social login allows users to sign in to sites using their social network ID and avoid creating yet another username and password. Marketers can then gather customer insights on the user from their social profile, as well as potentially post the user’s site activity to a network. Of course, marketers must be extremely careful about how they frame and implement social login, as privacy concerns are a leading reason users shy away from the service.

It’s evident why Google would want to grab hold of more of the social login space. Although Google+ has not taken off substantially with social networkers, its ability to integrate with search data gives Google unprecedented user information, and social login allows for even more robust customer profiles.

In Q3 2012, Facebook’s share of the social login space had risen to 54%, compared with Google’s 25%. By Q1 2013, Facebook had dropped down to a 46% share, while Google rose to 34%.

On consumer brand sites, Google made the biggest gains in social sign-in share. Although Facebook still holds on to the majority of consumer brand social logins, between Q4 2012 and Q1 2013, Google increased its share from 23% to 28%. Google also made a slight gain on media sites.

Twitter has a very small piece of the overall social login pie, and that share keeps shrinking—from a high of 10% in Q3 2012 down to 6% in Q1 2013. But Twitter does have a growing niche in the social login space. On music sites, Facebook’s share of logins tumbled significantly, from 60% in the last quarter of 2012 down to 51% in Q1 2013. Meanwhile, Twitter grew its share from 12% to 19% over the previous quarter.

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©2013 eMarketer Inc. All rights reserved. www.emarketer.com

US Social Spend Breakouts Show Rising Influence of Mobile, Local Outreach

 

http://www.emarketer.com/Articles/Print.aspx?R=1009827

Apr 19, 2013

Native advertising is also showing significant growth

Three major trends are driving some of the biggest changes in social ad spend and helping kick up growth: the mobile channel, local outreach and native ad formats. Estimates from BIA/Kelsey released in its “Annual US Local Media Forecast: Social Local Media 2012-2017” report showed that the firm expected social media ad spending in the US to total $6.1 billion this year—and be just shy of $11 billion in 2017.

But how that total is distributed is beginning to change as more marketers take up some of these new social advertising opportunities.

BIA/Kelsey expected local social ad spending to grow by 45.5% in 2013 and reach a compound annual growth rate (CAGR) of 26.4% between 2012 and 2017. This year, local spend is expected to account for about one-quarter of social ad spending. By 2017, national spending will still dominate social spending, but local’s portion will rise to one-third.

Native formats have also risen to the surface as one of the most important social ad developments, led by new offerings from Facebook and Twitter. Advertisers have been quick to purchase Sponsored Stories and Promoted Tweets, both of which are seamlessly integrated into the user experience.

Breaking down that $6.1 billion between display and native ad spending, the study predicted that this year native spending will account for nearly 40% of total spend. (Differences in totals between the various breakdowns is the result of rounding.) The remaining 60% will go to traditional social display spending. Native formats will grow by 45% in 2013, and growth will remain in the double digits through 2017. However, native’s portion of the total is expected to remain fairly flat.

Mobile is the key trend, though, driving much of the change in digital advertising, and its influence will bring more marketer dollars into the mobile-social fold over the coming years. Mobile-social spend is expected to rise by a CAGR of 30% over the forecast period. Last year, mobile accounted for 13% of social spend; in 2017, it will account for one out of five US social dollars, according to BIA/Kelsey, at $2.2 billion.

eMarketer’s estimate for total US social spending in 2013 is lower than BIA/Kelsey’s, predicted to reach $4.16 billion this year. Both firms expect growth of approximately 30% this year.

SoundExchange Announces Largest Q1 Payment Ever With $117.5 Million Paid To Artists and Labels

 

http://www.allaccess.com/net-news/archive/story/117444/soundexchange-announces-largest-q1-payment-ever-wi?ref=mail_recap

April 16, 2013 at 6:59 AM (PT)

SOUNDEXCHANGE has announced a first-quarter 2013 distribution of $117.5 million. The organization notes this is the "largest first quarter payment to recording artists and record labels to date with a nearly 10% increase from the first quarter 2012 distribution."

SOUNDEXCHANGE distributed a record-setting $462 million to recording artists and labels in all of 2012.

Since inception, SOUNDEXCHANGE has paid more than $1.5 billion in royalties to the creators of music. In addition, SOUNDEXCHANGE now works with more than 2,000 digital music services that rely on it to administer the statutory license for the use of sound recordings.

"Our first quarter numbers show that this digital radio revenue stream is continuing to grow. We are pleased to see 2013 off to an incredible start for the creators of music," said SOUNDEXCHANGE Pres. MICHAEL HUPPE. "We are committed to making sure recording artists and record labels receive the compensation they rightfully deserve, and we are proud to help facilitate this growth that helps move the music and creative community forward."

NAB Show Wednesday: The FCC Chairman Drops By, 'Digital Strategies For Radio' Returns

• April 10, 2013 at 2:35 PM (PT)

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  WEDNESDAY's sessions at the NAB SHOW in LAS VEGAS featured an appearance by outgoing FCC Chairman JULIUS GENACHOWSKI, who sat for a question-and-answer session with MEREDITH LOCAL MEDIA GROUP Pres. PAUL KARPOWICZ. GENACHOWSKI, who reminisced about growing up listening to the old WLIR/LONG ISLAND and being a DJ as a high school student on a college radio station (as "The Midnight Rambler"), lauded the Commission's "team effort" in areas like incentive auctions (calling freeing up spectrum for wireless broadband "a big, big deal"), the Universal Service Fund overhaul, and helping develop broadband.  The early conversation focused in large part on the spectrum auctions and mobile broadband, with GENACHOWSKI touting the latter as a strong economic opportunity for broadcasters.

  On media ownership, GENACHOWSKI said that the Commission has to take the Internet and mobile into consideration when thinking about broadcast ownership, and added that the effect of the Internet on journalism needs to be considered but that the fact that broadcast is still a dominant medium is also important.  He reiterated his support of minority tax credits,

  On radio, GENACHOWSKI said he believes a low-power FM window will open this year, noting that "this is something the Congress has an interest in."  Asked if a large number of applications for LPFMs -- KARPOWICZ suggested over 100,000 -- would be overwhelming to the Commission, GENACHOWSKI responded that he didn't think so and raised the issue of the sequestration, but said that the Commission has worked to make processes more efficient with electronic filing.

  Digital Strategies Session Is Back

  A day-long "Digital Strategies For Radio" session began at 10a and was scheduled to run for six hours in a single room, a program that originated with last year's show.  SKIP PIZZI began the event with a series of slides touting how Internet radio is still at relatively tiny levels of listenership and traditional radio remains dominant and used even by those using PANDORA and other streaming services.

  Connected Cars and Radio

  LINCOLN FINANCIAL MEDIA's BARRY THOMAS moderated a session on "The Digital Dash" with the CEA's MIKE BERGMAN, the CONNECTED VEHICLE TRADE ASSN.'s VALERIE SHUMAN, and CONCANNON BUSINESS CONSULTING's JON BUCCI presenting talks on the "connected car" from different perspectives, with SHUMAN touting the new systems from the auto makers' position, including a test in ANN ARBOR of systems that allow cars to "talk" to each other and thus avoid collisions; BUCCI , formerly at TOYOTA, looking at societal trends and what the "digital dash" means to consumers, focusing on opportunities for broadcasters (providing unique content to audiences, including personalities, new music discovery, and local news/traffic/weather); and BERGMAN examining the aftermarket industry's position, noting that iPod connectivity far outpaces the growth of built-in HD Radio and A2DP Bluetooth, and Internet radio (a "nuclear rocket") growing at a much faster pace than anything else, expected to hit 82% penetration in 2016 (but smartphone growth is blowing any other portable electronic device sales away, which portends vastly more Internet radio growth).  BERGMAN criticized stations that don't send text with their signals for HD and RDS-enabled radios, or send just call letters or redundant, overlong text.  The panel discussed HD RADIO (SHUMAN said that there is a "mixed bag" with HD, with more systems in cars but problems with lack of consumer demand; BUCCI mentioned a quality issue, with low JD POWER numbers; BERGMAN echoing the problem of no consumer demand), the quality of 3G and 4G service and its impact on streaming, and other related topics.

  Creating and Monetizing Radio Apps

  A panel on apps moderated by GREATER MEDIA's JENNIFER WILLIAMS featured TUNEIN's KEVIN STRALEY, JACOBS MEDIA/jacAPPS' FRED JACOBS, and BEASLEY's KATHLEEN BRICKETTO, who started with a talk on selling local advertising on streaming and for mobile.  STRALEY, the former XM RADIO executive and ENTERCOM Talk WRKO-A/BOSTON PD, gave an overview of TUNEIN's business and offerings to broadcasters, and JACOBS offered a presentation of the state of the mobile apps art from jacAPPS' perspective, and how to design strong mobile apps, outlining what makes apps successful (a single function, fulfilling a specific need, easy to navigate, buzzworthy, timed right) and questions to ask when designing a radio station app (who the target user is, where they'll use the app, what the most important function of the app is, whether the app will be in "permanent beta," always changing, and whether your station needs multiple apps).  JACOBS added that apps are "made for Americans" (with apps not being as popular overseas as they are in this country), and will remain prominent in the future; he also asserted that "every CEO should be forced to turn in their BlackBerry," go on Twitter and Facebook, and attend CES, saying that if one goes to the same shows and sees the same people over and over, "you don't move."

  Social Media for Radio

  Lunch was provided by consultant HOLLAND COOKE, who gave a presentation with his take on digital radio and social media, calling AM and FM "car radio" and Internet audio "radio everywhere else."   COOKE enthusiastically endorsed Twitter with a list of reasons to use the social media service,  KTBB-A-F/TYLER, TX owner PAUL GLEISER joined COOKE to talk about his coverage of the Papal election,   EDM KYLI (96.7 JELLI)/LAS VEGAS GM KATHY KOCH explained her station's success using the JELLI interactive programming platform and engaging listeners with social media. 

  'Hybrid Radio' Puts Pictures To Broadcast

  A presentation from GLOBAL RADIO and RADIODNS' NICK PIGGOTT on Hybrid Radio -- radio broadcasts supplemented with metadata and visual material via IP -- noted that "we are going into an environment where everything has got screens and we have got to produce content for those screens."   Hybrid Radio, he noted, has greater capability than just showing album cover art with songs, "If we have the capability of being on that screen," PIGGOTT said, "we ought to use that."  The RADIODNS solution is to supplement FM broadcasts with the data and graphics served over IP, saving data usage for users.
  
  EMMIS' PAUL BRENNER has been working on the NEXTRADIO app that would bring Hybrid Radio to the U.S. via FM-equipped cell phones, and he presented an overview of the new service in the smartphone space.  The app shows pictures and album art along with tagging for later purchase.  Asked by ALL ACCESS whether the service is playing catchup while competitors have moved on to customization, BRENNER responded that "there's some catchup that's occurring, but this allows us the ability to tell a different story," with synchronous visuals and data, and allows for creative use of visuals to augment and possibly leapfrog competitive services.  He noted substantial acceptance of FM radio in cell phones in EUROPE, including RAJAR researh in the U.K., as an indication that the service will be desirable to consumers.

  New Ideas Showcase

  A "New Idea Showcase" moderated by GREATER MEDIA's MILFORD SMITH with ENVISION RADIO NETWORKS' DANNO WOLKOFF, ABACAST's JIM KOTT, PARAGON MEDIA STRATAGIES' MIKE HENRY, AUDIOBOO's CYNTHIA FRANCIS, and MARKETRON INTERACTIVE's DEB ESAYIAN gave the panelists a chance to make presentations about their companies and take questions from the audience.

Younger Consumers Turn Up Digital Music Listening

Apr 11, 2013

Revenues from digital music formats to grow 14% from 2012

Internet radio is running on terrestrial radio's coattails, according to a report by market research company The NPD Group. The Q4 2012 study, which surveyed US consumers ages 13 to 35, found that AM/FM radio is still the primary method for music listening, cited by 24% of respondents. However, internet radio is just behind with a 23% share. CDs fell to account for a lowly 9% of music listening, and satellite only accounted for 5%.

Of the streaming services used by US music listeners, Pandora's free service dominated, in use by 39% of respondents. Pandora was trailed by iHeartRadio, Spotify's free version and Grooveshark.

NPD made note of the rising impact of mobile on music listening. In another study released in February 2013, the research firm found that already 56% of US smartphone owners used their smartphone for listening to music. And of that group, 65% used internet radio apps like Pandora, above the 60% who listened to their own music catalogs and 30% who used on-demand services like Spotify.

What's more, 39% of those listeners plugged in to smartphones to listen at least once per day. And 54% reported spending more time using their smartphone to listen to music than did so a year ago.

Interestingly, NPD found that among the 13-to-35 age group, the car is still where the majority of respondents did most of their music listening. This draws attention to in-car infotainment systems, many of which now integrate digital music services like Pandora. Additionally, a common practice is to plug in a smartphone while in the car, and to stream music content through the phone.

According to the Recording Industry Association of America (RIAA), industry revenues from digital music formats grew 14% in 2012 from the prior year. RIAA notes that the bulk of digital revenue came from access models—services in which users have access to a music library catalog, rather than purchase individual songs or albums. Access models include paid subscription services and non-subscription streaming services.

Facebook is the No. 2 online video property, but doesn’t hold a candle to YouTube’s dominance

 

http://www.emarketer.com/Article/Just-How-Popular-YouTube/1009787

When most users think of digital video, they most commonly think of YouTube. And it’s no coincidence, given the dominance of the video platform, that visits to YouTube trump those of any other video platform.

A study by AYTM Market Research examines just how popular YouTube is as a platform—and to what degree users consume YouTube content. The study showed that the vast majority of US internet users (about 60%) visited YouTube at least once a week in March 2013. Out of that percentage, 22% visited YouTube every day, and nearly 30% visited YouTube a few times per week.

Perhaps most striking are the low percentages of internet users who rarely or never visit YouTube. Only 14% of internet users surveyed reported “rarely” visiting the platform, and only 9% never did so.

To put YouTube’s popularity into perspective, AYTM also looked at the frequency of internet users watching videos on sites other than YouTube. Thirty-seven percent said they rarely watched on a site other than YouTube—11% said they never did.

Although 16% watched on sites other than YouTube a few times per month, and 27% watched more than a few times per week, the amount of video consumed is likely dramatically lower than on Google properties. According to comScore data from December 2012, Google sites made up the vast majority of online video viewership in the US in terms of unique viewers, videos viewed and time spent per viewer. The No. 2 video property, Facebook, was dramatically lower in terms of unique viewers, videos and average time spent per viewer.

YouTube’s ubiquity across Google sites and easy integration on other content platforms has contributed to its dominance. However, video views on other platforms—like Facebook, Vevo and NDN—also contribute to the overall growth in time spent with online video in general. eMarketer estimates the number of online video viewers in the US will grow nearly 6% in 2013, to reach 182.5 million viewers.

Read more at http://www.emarketer.com/Article/Just-How-Popular-YouTube/1009787#1zoz3FLH3EqGASZ1.99

Metade das campanhas já passa por pré-teste

 

Agências criticam esta prática, que se torna mais frequente. Anunciantes e institutos de pesquisa se defendem

FELIPE TURLÃO| »

03 de Abril de 2013 • 14:44

O pré-teste de campanhas ganha espaço no mercado na mesma medida em que causa choques de interesses entre institutos que ganham dinheiro para fazê-lo, anunciantes em busca de dados que deem segurança a seus investimentos em publicidade e agências ansiosas à espera de um parecer sobre a ideia que tiverem e consideram genial.
Segundo levantamento feito pela reportagem de Meio & Mensagem junto a 15 agências listadas entre as que mais compram mídia no Brasil, uma média de 50% das campanhas passam pelo pré-teste (confira tabela abaixo). E o número só cresce, conforme atestam publicitários ouvidos pela reportagem. “A situação piorou. Tenho visto com mais frequência grandes ideias irem para o lixo por causa da indisposição de se correr o mínimo risco”, aponta Alcir Gomes Leite, copresidente da DM9DDB. “O anunciante precisa ser muito corajoso para fazer um pré-teste.Porque é justamente ali que ele pode perder uma ideia excepcional”, critica Washington Olivetto, chairman da WMcCann, resumindo a visão de boa parte dos criativos do mercado.
Fernand Alphen, head of planning da JWT, corrobora com essa tese. “O material de estímulo, seja animatic, narramatic, storyboard animado, ou mesmo um filminho referente, é bem diferente do resultado final. É como se mostrasse para as pessoas uma escultura do Rodin feita de durepox”, brinca.
Anunciantes e institutos defendem prática

Do lado dos anunciantes, está cada vez mais difícil aprovar uma campanha sem pré-teste e isso explica sua maior incidência. “Os acionistas nos cobram mais, especialmente após a crise financeira de 2008. Como donos da empresa, eles querem saber para onde está indo o dinheiro que investimos, inclusive em publicidade, e o retorno que obtemos”, aponta Ricardo Monteiro, diretor de comunicação e mídia da Reckitt Benckiser.
Da mesma forma, a Mondelez (ex-Kraft Foods) utiliza pré-testes para todas as campanhas com aportes significativos. “Hoje, precisamos ter um retorno efetivo sobre os investimentos publicitários e, nesse contexto, os pré-teste de comunicação são fundamentais”, atesta Karina Tosin, gerente de consumer insights e estratégia da Mondelez.

Já os institutos de pesquisa sabem bem que o consumidor não está sendo testado em seu habitat e que o material recebido pode disseminar algumas conclusões incorretas. E eles têm procurado evoluir. Mas a questão, dizem, não se resume a isso. Para eles, o pré-teste tem sido isolado para facilitar os ataques, mas é apenas parte de uma engrenagem muito maior e que acaba recebendo a fama negativa por erros cometidos em outras partes do processo. “Existe uma questão política nisso, porque o instituto é uma terceira parte que está avaliando a agênciadiante de seu cliente. Não é algo fácil e tomamos muito cuidado. Por isso, o que propomos não é uma avaliação, mas sim a criação de subsídios para uma conversa madura sobre o comercial”, aponta Valkiria Garré, diretora executiva da Millward Brown no Brasil.
“Enxergamos o pré-teste não como uma avaliação pontual, e sim como parte do processo mais amplo de desenvolvimento de campanha”, concorda Diego Pagura, diretor de novos produtos na Ipsos.
Para Vera Aldrighi, dona da Vera Aldrighi Clínica de Comunicação e Marketing, mais focada em pesquisas qualitativas, a falta de visão das agências sobre o que é o pré-teste é ocasionada pela inexperiência dos profissionais envolvidos. “Há algum tempo, anunciantes e agências não têm mais profissionais especializados em pesquisa. Há poucos planejadores em agências que conhecem do assunto, porque o perfil da atividade mudou. Hoje, eles são mais ligados a tendências e mercado. Não que perfil não seja essencial, mas há uma falta de conhecedores depesquisa para darem briefings melhores para o pré-teste”, aponta a profissional, que trabalhou em agências por 21 anos.
É nesse limite entre balizadora de ideias ou matadora das mesmas que os pré-testes de campanhas estão posicionados.
O que dizem as agências:

- métodos de pesquisa provocam pasteurização da publicidade
- consumidores são analisados em condições diferentes de seu habitat de consumo de mídia
- pesquisas não captam impacto emocional dos comerciais
- tempo para realização dos pré-testes é muito grande
- anunciantes encaram pré-testes como dados científicos que o garantem em caso de resultados ruins nas campanhas
- campanhas que passam bem em pré-testes não necessariamente serão bem-sucedidas vida real. E vice-versa
O que dizem os anunciantes:
- acionistas da empresa querem saber o retorno em cima do investimento
- outros setores da empresa, como diretorias de produtos ou mesmo o CEO, querem dados para justificar investimento
- a estratégia da marca e os objetivos da comunicação são a base para a análise dos testes
- há diversos casos em que se corre risco de assinar campanhas sem pré-testes, mas não pode haver predomínio

O que dizem os institutos:
- agências reclamam porque estão sendo analisadas por um terceiro diante de seu cliente
- pesquisas são calibradas para considerar possíveis desvios causados pela falta de emotividade e pelo habitat estranho ao consumidor
- há esforços para reduzir o tempo do pré-teste, como o uso de ferramentas online
- há uma busca por novas ferramentas, como as de neurociência, para ter um resultado mais preciso
- pré-teste é parte de um processo mais amplo de desenvolvimento de campanha e não pode levar a culpa sozinho
- faltam profissionais que entendam de pesquisa nas agências e anunciantes

Confira reportagem completa sobre o assunto na edição 1553 de Meio&Mensagem

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Disownership is the new normal: the rise of the shared economy (infographic)

"You don't own me" is not just an idea for 1960s ballads. "Disownership" is a national trend in America right now, as Internet startups transform the way people consume goods and services.

Consumer attitudes and behaviors surrounding renting, borrowing, and leasing items, versus ownership, are shifting around the country, according to a study conducted by Sunrun and Harris Interactive. The survey of 2,252 adults found that 52% of Americans have chosen to rent, borrow, or lease items instead of buy them in the past two years. Twenty-four percent of Americans are more likely to engage in disownership now than five years ago, and 49% plan to "disown" traditionally-owned items in the next two years.

"These results show we've entered an age in which Americans recognize they can get more value by owning less," said Sunrun cofounder and CEO Lynn Jurich. "At the same time, smart companies are creating innovative business models that offer consumers more flexible choices for accessing the things they want and need. Disownership represents a major cultural shift in consumer behavior- a shift that benefits our wallets, our planet and our communities."

Part of this shift is due to the desire to save money and cut down on maintenance and storage. However, startups in the "shared economy," "peer-to-peer marketplace" or "collaborative consumption" space have made it far more convenient, trustworthy, and downright pleasant to share rather than own.

AirBnB changed the landscape for travel accommodation, giving people the opportunity to stay in other people's homes rather than impersonal and expensive hotels. Ride-sharing companies like ZipCar, Lyft, Uber, SideCar, and RelayRides have made it easier to get around without owning a car, and sites like RentTheRunway, BagBorrowORSteal, and resale marketplaces like Threadflip and Tradesy encourage woman to buy, sell, and wear used garments rather than new.

Many of these startups are based in San Francisco with a user base primarily comprised of "California hipsters." However, Sunrun's study found that these cultural shifts are not only occurring amongst the young, trendy, and urban. Among Americans 55 years or older, 25% reported being more likely to rent, lease, or borrow items traditionally owned today than five years ago, and 39% have chosen to rent, borrow, or lease these types of items than in the last two years. Furthermore, around 50% of survey respondents in the South and Midwest said they participate in "disownership."

Commonly-shared items include vacation houses and rooms, heavy equipment, books/textbooks, and household tools, cars and trucks, and high-end luxury apparel and accessories. Sunrun provides home owners with solar panels without the high up-front costs that deter many people from going solar. It does this through "solar financing," where people can lease solar panels from third-party providers. The study was commissioned to gather data on how consumers participate in the "access economy."

The rise of disownership is an important national trend, as well as a tech/startup trend. The shared economy is not only about leveraging under-used resources, but also about connecting people online in a safe way. Even five years ago, the idea of letting a random person on the Internet stay in your home or get in the car with you seemed crazy and potentially dangerous. However, the rise of social networking and crowdsourced information adds in a layer of identity verification and accountability that helps people trust each other.

The economy of disownership is social, local, and often mobile. It is an example of the way tech startups can create meaningful offline interactions, pioneer national cultural change, and benefit the environment to boot.

Photo Credit: Shutterstock

Filed under: Business, Social

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Israeli 'big data' startup SiSense gets $10M & reports 520% revenue spike

SiSense closed a $10 million funding round today for its "big data" technology that competes with giants like SAP and Oracle.

"We are seeing most success when we compete against the bigger guys who are too expensive or can't scale to the terabyte [data] range we are going after," said Bruno Aziza, SiSense's marketing lead, by phone.

SiSense's VP of Marketing, Bruno Aziza

Every company in the business intelligence and "big data" space will tell you that they analyze mountains of data and infer actionable insights that can inform a customer's business strategy. SiSense's messaging is no different. But according to Aziza, the competitive advantage is that SiSense won't just ask for a sample of data — they want it all.

"We can use the entire data set," said Aziza, meaning that SiSense will analyze all manner of structured and unstructured information, including emails, documents, and tweets. "That is really difficult to beat from a competitive standpoint," he added.

In the past year, the company says it's experienced a 520 percent growth in subscription revenues. Customers include household name brands like Target and Merck, as well as hot startups with a mass of customer data, such as Wix and Uber.

We reported on the Israeli company last month when its chief technology officer crunched 10 terabytes of data in 10 seconds using an off-the-shelf $10,000 machine. The team pulled off the stunt at the O'Reilly Strata Conference, which focused on "big data."

Marketing lead Bruno Aziza said the company plans to use the funding to open an office in New York. SiSense will also ramp up its sales efforts, and it recently brought on a sales lead from networking giant Cisco.

The funding was led by Battery Ventures with participation from Opus Capital and Genesis Partners.

Filed under: Big Data, Business, Cloud, Deals

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Startup stories: What I learned in a year with WisePricer

Roey Brecher is co-founder and CTO of pricing intelligence startup WisePricer.

As I'm writing this post, I'm sitting in an apartment that our business development guy is renting in Oakland. I'm practically homeless at the moment but I couldn't care less.

If there's anything the past year had taught me, is that owning less stuff keeps me happy. I (partly) own one big 'thing' that I'm most proud of, and that is WisePricer. The clothes I wear are either startup t-shirts (x3 @olark, so thanks @ben) or Uniqlo whites. I take next to nothing from the business account but I'm positive better days will come. I don't feel like I'm missing out on anything.

We launched WisePricer in 3 months.

It was a dirty alpha version with core functionality missing, but we got a few paying customers right off the bat. There was (and is) a real need for what we came up with, even in its barely functional state. That proved to be the first lesson which is something most entrepreneurs know these days but as I came from the corporate world, I had no clue.

Moving forward and getting early traction while trying to raise seed money was another eye opener. It wasn't before long that we realized that our product was suffering from the time we spent talking to investors. We did raise a small amount but made a mental note to focus on generating revenue. It worked.

Scaling efficiently was our next big challenge. We learned not to solve any problem before it was real and actually hurting us. You only begin to understand your true power to persevere when your server crashes 40 minutes before an important demo. If you can keep yourself from tending to tasks that are fun but you are not entirely sure will be fruitful (like developing that awesome feature your team considers really cool), pat yourself on the back, that's how it's done.

Spending money is another big thing. As we soon decided that we would try to minimize our dilution by growing slowly through earnings rather than investments, we started to take our cash flow seriously. We spent December's holidays in a cheaper country (rent, food, booze and whatnot). We relied on some good friends and set up office in their conference room (they have kicked us out since, all on good terms).

I won't tell you how three of us shared a two-bedroom apartment … but let's just say my co founder knows my snoring pattern pretty damn well.

We were also hustling. When attending demo days or conferences, asking for discounted admission tickets is nothing to be ashamed of. Paying for a booth? Not in our budget. You will be amazed how many people you can meet when you are actually waiting around a conference hall premises and engaging in conversations.

There's another truth I learned: Always ask for discounts. And if you are getting something for free, ask for an extension (Yuval from our team will say, ask for two). In one five minute phone call my cofounder saved us $12,000 in hosting fees.

Are we making enough money to live long and prosper? We soon had to face that question when we wanted to bring more people on board. More people means more expenses, but our time was devoted to onboarding new customers. And the B2B world is different in that you need to have a solid sales funnel.

We went back to Israel only to realize we needed to be in Mountain View two weeks later for a YCombinator interview. That interview didn't go as expected (unless you are expecting to not get picked which I can honestly say we didn't). It did however gave us the push we needed to pivot into the enterprise world. Think big and you shall receive.

I learned some things about working while spending your spare time with your co-workers. In a normal world, you rarely see your co workers outside of work. Heck, you rarely think about work outside of work. In a startup world, you are spending so much time with your team you sometime want to drive a fork through their hearts and twist it, but you don't, because that's illegal, and you need them.

Jokes aside, it can be most stressful. Learning to push aside differences and keeping non-work issues where they belong (outside of work) is how you grow.

It all comes down to Ego. The more you have of it, the less you will be willing to compromise.

Filed under: Business, Entrepreneur, Small Biz, VentureBeat

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7 reasons for entrepreneurs to avoid tranched investments

Carlos Eduardo Espinal is a partner at London-based startup incubator SeedCamp.

Investments, like the ocean, can come in waves, but that doesn't mean they should.

A "tranched investment" is an investment that is split into one or more parts. In order for the company to receive the latter parts of a tranched investment, it usually has to achieve goals or objectives set as part of the conditions of investment. A typical example of a tranche is: the investors give you half the investment amount right now, and half the investment when your revenues reach 'x'.

Generally speaking, the current thinking around tranches by most investors is that they are a good tool to motivate founders to reach a milestone or alternatively to reduce their exposure to risk. However, tranches are more damaging to the long term success of a company than investors may typically consider, particularly if milestones are not met or the company comes dangerously close to just meeting them.

Specifically, I think tranches can:

•  de-motivate founders and potentially reduce a founder's drive (according to Daniel H. Pink's view of extrinsic motivation, see below for more on this)
• reduce a founding team's creativity on how to grow the business in a way that might be long-term better, but short-term fails to achieve the next pre-determined milestone. Think of a company sticking to a product rather than pivoting in hopes to hit a deadline, but then ultimately sticking with a product that long term will not yield the maximum returns.
• potentially reduce good-behavior (read: cheating to hit numbers). If someone is really really needing the cash, temptation to do something to cut corners is there.
• promotes "sandbagging" by the investor rather than full commitment
• creates a self-fulfilling prophecy. In the words of the CEO of Zemanta, Bostjan Spetic, "the cash you are raising is usually what you need to get to a significant milestone, like break-even. Tying that budget to sub-milestones implicitly reduces the chances to actually hitting the big milestone, because it increases the risk of running out of cash prematurely. I firmly believe that."
• create an accelerated cash burn to achieve the goal, and then if missed by a little, leaves the company in a vulnerable position for subsequent fundraising.
• makes the company toxic for an external investor that would be interested in investing, if the company doesn't receive the tranche from its existing investors.

So, if you're a founder, what do you say to an investor who's hell-bent on implementing tranches in your term sheet? And, if you're an investor, how do you reduce the risk of your investment so that you aren't over allocated prior to the key inflection milestone being achieved?

My recommendation for both these questions is to get a dialog going to agree on one of the following three potential alternatives:

1. Reduce the amount of money and targe a closer-term milestone for the startup to achieve. Yes, this implies that if the startups hits its milestone, it may command a higher valuation and the investor will not have been able to secure the economics of a tranched investment, but in exchange, the investor is getting a higher probability of overall success for their investment.

2. If an investor really needs to have tranches, implement "binary" milestones that are simple and clear. What you want to avoid are tranches that have partial or subjective achievement, such as when a company comes pretty close to hitting its revenue figure or number of users. An example of an ideal binary milestone would be: You will get a sum of money unlocked equaling the salary of a new CFO when you hire that CFO. The target is clear (hire CFO), it is not ambiguous or 'close enough'; you either hired the CFO or you didn't, and then the amount of money is tied to that achievement.

3. If you can't agree on either of the above, that implies either the company is overvalued for where it is, or the investor may be overly cautious; if the latter, then the founder might want to reconsider taking them on as investor (assuming he/she has a choice).

One more thought on why the carrot/stick theory behind tranches doesn't work: In his book Drive, author Daniel H. Pink walks through classical motivation models and compares them to his observations on actual motivation. He makes a very compelling case for companies, managers, parents, and just about anyone to rethink their preconceived notions on motivation, particularly around old carrot vs. stick methods.

He says the old form of motivation fails because for three reasons. One, It doesn't mesh with the way many new business models are organizing what we do — because we're intrinsically motivated purpose maximizers. Secondly, It doesn't comport with the way that 21st century economics thinks about what we do — because economists are finally realizing that we're full-fledged human beings, not single-minded economic robots. Finally, it's hard to reconcile with much of what we actually do at work — because for growing numbers of people, work is often creative, interesting, and self-directed rather than unrelentingly routine, boring, and other-directed.

This topic may yield contrasting views on the efficacy of tranches by investors, but I sit squarely on the side that tranches, as they are generally used, are more value dilutive than value accretive for all parties involved.

Filed under: Business, Deals, Entrepreneur, VentureBeat

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RIAA Finds Music Industry Revenues Have Leveled Off

April 3, 2013 at 5:32 AM (PT)

http://www.allaccess.com/net-news/archive/story/117035/riaa-finds-music-industry-revenues-have-leveled-of?ref=mail_news

The RIAA reports that although "revenues are still well below the highs of over a decade ago, total U.S. music industry revenues showed a second year of stabilization relative to the steep declines of prior years. Overall recorded music sales revenues for 2012 were $7.1 billion, down 0.9%, after a slight increase from 2010 to 2011.

In a study released YESTERDAY (4/2) the RIAA found that "Industry revenues from digital formats continued to grow, and in 2012 surpassed $4 billion for the first time ever, up 14.0% versus the prior year. Overall, digitally distributed formats comprised 59% of the total U.S. market by dollar value in 2012, after crossing the 50% threshold for the first time in 2011."

Digital growth was found to have been "driven by large increases in revenues through what can broadly be referred to as 'access models,' where users can choose to listen from large libraries of music rather than purchasing individual songs or albums. This category includes revenues from subscription services (such as RHAPSODY and paid versions of SPOTIFY, among others), streaming radio service revenues that are distributed by SOUNDEXCHANGE (like PANDORA, SIRIUSXM and other Internet radio), and other non-subscription streaming services (such as YOUTUBE, VEVO and adsupported SPOTIFY, which this year are included for the first time in this report)."

The proportion of total industry revenues from access models "have quickly become significant revenue contributors for the industry," notes the report. "Collectively, they went from just 3% of total industry revenues in 2007 to 15% in 2012, totaling over $1 billion for the year. Distributions for digital performance royalties from SOUNDEXCHANGE, which include payments to performers and copyright holders for webcasting, satellite radio, and other non-interactive digital music services, increased 58% to $462 million in 2012."

Overall, "Digital downloads, including albums, single tracks, videos, and kiosk sales were up 8.6% by value, from $2.6 billion in 2011 to $2.9 billion in 2012. Digital albums continued to grow, from $1.1 billion to $1.2 billion (12.5%) in 2012. Digital album volume of 116.7 million marked the second year in which the total exceeded 100 million. Digital albums accounted for 35% of all album sales by volume, up from 30% in 2011. Digital tracks also grew but at a slower pace, up in total value 6.7% from $1.5 billion in 2011 to $1.6 billion."

As for CDs, "after a more moderate decline in 2011, there was a significant decline in the physical market in 2012. Overall value was down 16.5%, from $3.4 billion in 2011 to $2.8 billion in 2012. Physical shipment volumes were down less at 11.7%, indicating a lower average price for music sales in physical formats. Vinyl though continued to grow, up 36% in value to $163 million in 2012, nearly equaling the total for ringtones, ringbacks, and other mobile products, but still only 2% of the overall market."

Business Matters: Reports of the CD's Death Were Greatly Exaggerated

Even though CD revenues have fallen sharply over the last ten years, most predictions about the format have been wrong. The CD's decline, while painful to companies, has been far more gradual than precipitous. Over the last four years, CD revenues have leveled off just as an airplane would before a soft landing.

The one thing everybody has correctly predicted is that the CD would decline. CD revenues fell 77.5% to $2.5 billion in 2012 from $11.2 billion in 2003, according to RIAA numbers released last week. The deepest losses occurred in 2007 and 2008, when CD revenues dropped over $1.9 billion each year. Total revenues suffered badly as a result in those years, falling 9.4% and 17.6% in 2007 and 2008, respectively. More recent years have not been as bad. After four straight years of deficits that exceeded 20% (from 2007 to 2010) CD revenues declined 8.5% in 2011 and 18.3% in 2012.

But, contrary to many predictions, there has been no cliff. In fact, the CD occasionally shows signs of stubbornness. Of the 969,000 units sold of Justin Timberlake's The 20/20 Experience in its first week of release, 53% were CDs and 43% were sold as mass merchants, according to Nielsen SoundScan. Sales undoubtedly benefitted from Target securing an exclusive two-CD set of the album with two exclusive tracks. Sixty-one percent of first-week sales of Taylor Swift's Red were CD sales. Nearly half (48.7%) of those sales came from mass merchants and 5.8% came from non-traditional retailers. Where there is a marketing partnership, there is an opportunity for the CD to shine.

Of course, these are industry-wide numbers. The fall of the CD will vary from company to company. A label without access to chains and mass merchants will likely get a higher percentage of revenue from digital sales than a label with a roster that gets radio play and has a roster of well known artists. A small label has indie stores and Amazon. A big label has Walmart, Best Buy, Target and all the others.

There is a bright side here. As years pass, there is less CD revenue to lose and deficits become more manageable. A 21.5% decline in 2009 equaled a loss of $1.2 billion in revenue. Last year, the 18.3% decline represented just $569 million in lost revenue. The smaller an annual loss in CD revenue becomes, the easier it will be for revenue from downloads, ad-supported streaming services, subscription services and vinyl sales to cover the difference. Last year, the gains in the latter four categories almost covered the $569-million drop in CD revenue as total recorded music revenues were down 0.9%.

It's arguable that the CD will ever go away completely -- at least within the next decade or two. Even if CD revenue drops 20% a year, the format will still have $217 million of revenues in 2013. That's not much, but it's over $50 million more than the $163 million done by vinyl records last year. As long as there is demand and there are manufacturers to fulfill that demand within a reasonable cost, expect to see the CD around for many more years.

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