Pandora to release day pass for ad-free listening

Pandora is looking to add a paid day pass to its service later this year, company executives revealed during Pandora’s investor day Thursday. The day pass will give users a way to listen without advertising interruptions, and they won’t have to subscribe to the company’s Pandora One subscription plan.

[company]Pandora[/company] Chief Product Officer Chris Phillips told investors Thursday that this could make Pandora a good source of music for a summer BBQ party, where users don’t want to annoy their guests with ad breaks. He showed off a slide that featured a sign-up page for a 24-hour plan for $0.99, but added that the company will be testing the price as well as the question whether the day pass should be for one or three days.

pandora one day pass

A Pandora spokesperson confirmed plans for the day pass Friday, sending me the following statement via email:

“Pandora is committed to delivering an effortless, personalized experience and we recognize some consumers may want an ad-free experience but don’t necessarily want to commit to a subscription. This offering will allow consumers to choose and explore what is right for them or suits a particular event or experience. Pricing and exact timing are yet to be determined but we expect it to be available later this year.”

Pandora currently offers an ad-free subscription tier dubbed Pandora One for $4.99 a month that also offers 192 kbps playback on the web as well as more skips per day than the ad-supported version of the service.

However, Pandora still makes most of its money with its ad-supported service; in Q4, the company generated $220 million in revenue from advertising, but only $47.9 million from subscriptions. Moreover, ad revenue grew 36 percent year-over-year, whereas subscription revenue only grew 24 percent year-over-year.

Apple reportedly wants to get rid of free on-demand music

Love free stuff? Then you won’t like Apple’s new music subscription service, which the company is expected to launch later this year. Apple is planning to launch the service without a free tier, and instead plans to charge every user after a limited free trial, according to a Recode report.

That’s similar to Beats Music, which Apple got its hands on as part of the $3 billion Beats acquisition last year. But it’s very different from Spotify, the current industry leader. Spotify has 15 million paying users worldwide, and at least 45 million additional users tune into the service’s free, ad-supported tier.

Spotify’s ad-supported tier has been so successful that competing services have started to embrace free music as well. Rdio, for example, long resisted giving music away for free, but the company now has a free radio service that aims to pull in users, with the goal of eventually converting them into paying subscribers.

However, Recode reports that label executives are increasingly growing frustrated with those free tiers, with some blaming them for the decline in music downloads. Apple wants to counter that trend with a $8 service, which is expected to be closely tied into iTunes and iOS.

Some in the industry would also question that notion, and instead argue that there are simply different price points for different types of users. Rhapsody has been trying to win over budget-conscious users with a $5 radio tier that is essentially like a Pandora without ands, and Deezer has started to charge audiophiles as much as $15 per month for lossless FLAC streams.

Deezer North America CEO Tyler Goldman told me at CES this year that he doesn’t believe in just one package and price for every type of user. Tyler Goldman “That silver bullet strategy doesn’t work,” he said.

Robots vs. pop stars: Who is better at curating your music?

The Apple rumor mill is getting its groove on these days as new details appear about a revamped streaming service slated to be launched in the coming months. 9to5Mac reported last week that Apple is working on a new music service that uses some of Beats Music’s technology, but is going to be deeply integrated into iTunes and iOS.

Business Insider followed up with another report Monday, suggesting that the project will feature curated streams from well-known musicians. [company]Apple[/company] also recently hired BBC Radio DJ Zane Lowe, and is looking for music journalists who could be writing copy for the new service. All of this suggests that the company is looking to keep Beats Music’s focus on human curation and build a more radio-like experience, possibly with help from many music celebrities.

The question is: Do music fans really want this? Do musicians make for good DJs, and do well-known names help to unlock the 30-plus million song catalog of a music streaming service?

Or would algorithms simply do a better job?

Musicologists and trillions of data points

The debate over human versus automated curation is almost as old as online music itself. [company]Pandora[/company] was one of the first services to embrace the idea of human curation in a personalized streaming environment when it built its Music Genome Project back in 1999.

The idea at the time was to not simply play songs because algorithms deemed them as a logical choice based on the behavior of other users, but actually figure out how each song sounds, which instruments it features and which tempo it uses. Pandora hired dozens of curators to catalog more than one million songs based on up to 450 musical criteria, and its website describes these curators like this:

[blockquote person=”” attribution=””]“The typical music analyst working on the Music Genome Project has a four-year degree in music theory, composition or performance, has passed through a selective screening process and has completed intensive training in the Music Genome’s rigorous and precise methodology. To qualify for the work, analysts must have a firm grounding in music theory, including familiarity with a wide range of styles and sounds.”[/blockquote]

Today, Pandora still relies on the Music Genome Project, but it is also using algorithms and data to make its playlists work.

Others took a different approach and ditched the human expert altogether, instead relying on the wisdom of the crowds and big data analysis to generate that perfect playlist. [company]The Echo Nest[/company], for example, which was acquired by Spotify a year ago, is using close to 1.2 trillion data points on more than 36 million songs to automatically generate playlists for Spotify and other services. The Echo Nest co-founder Brian Whitman will be at our Structure Data conference in New York next month to tell us how he wants to use all that data to reinvent the music industry.

Park rangers, not gatekeepers

Lately, the pendulum has swung back to human curation, with Beats putting a heavy emphasis on its expert curators, and Slacker building a radio-like experience around YouTube stars and other personalities. The reports about Apple’s plans now seem to suggest that the company wants to go further down that road, embracing stars to become both brand ambassadors and actual curators of your music.

However, not everyone is convinced that this is a good idea. Online music industry veteran Tim Quirk, who used to head music programming for pioneering streaming service Rhapsody and then did the same thing for Google Play Music, took to Twitter today to object to the idea that musicians make good curators. Here are some highlights of his arguments:

[pullquote person=”” attribution=”” id=”917022″]Will the future of music look like Sirius XM or like Netflix?[/pullquote]

Of course, many will argue that there is value to expertise, and point to great radio DJs, so of which even are musicians. That’s why I asked Quirk what it takes to bring this kind of personality-driven curation to streaming services. His answer:

“Subtract the personalities. Seriously. They need curation that doesn’t brag about itself.”

In the end, this may all come down to the question what music services want to be, and how they plan to appeal to millions of consumers who have thus far shied away from music subscriptions. Do they want to be more like traditional radio and guide listeners through a catalog of millions of songs? Or do they want to be the celestial jukebox that brings millions of songs to your fingertips, ready for you to go on your own adventure?

In other words: Will the future of music look like Sirius XM or like Netflix? The first company to find a compelling answer to that question may be able to really take music subscriptions mainstream — with or without celebrity DJs.

Sony’s Spotify partnership shows me-too services don’t pay

Are you a PlayStation user? The Sony’s got a music service for you. Again. Except, this time, it’s not its own: Sony announced a new partnership with Spotify Wednesday that brings Spotify’s music service to PlayStation users in 41 markets around the world. At the same time, Sony is shuttering its Music Unlimited service, which had been trying to compete with Spotify and others in 19 countries.

This isn’t the first time Sony failed at music: The company was amongst the first to try its hand at music subscriptions with Pressplay, a music service jointly launched with Universal Music in 2001, but sold to a third party in 2003. The company went on to launch a music download store dubbed Connect in 2004, which was supposed to bring digital music downloads to the company’s portable music players. Those didn’t sell, so Sony closed Connect in 2008.

Those two failures didn’t stop Sony from trying again in 2010, this time with a service curiously called Qriosity that was soon after rebranded as Sony Music Unlimited. This service, which will now close on March 29, was closely tied to Sony’s game console, with a Sony representative telling me a year ago that PS4 users made up for close to 40 percent of all streams.

But in the end, Sony Music Unlimited was just one more service to offer what all of its competitors already have: The same 30-plus million tracks from all the major and most indie labels, delivered at the same price, with the same all-you-can-eat value proposition.

The only thing that differentiated Sony from the rest of the pack was its access to PlayStation users. As a platform gatekeeper, it could make sure that no one else was competing with it. Or so it thought. But that’s not how the world works anymore.

Users want to access their services across multiple platforms. For music, mobile really is first. Connected speakers are quickly gaining steam as well, and automotive integration could be a major factor in the future.

But owning one of those device platforms and building a me-too service that just does what popular competitors offer elsewhere isn’t enough. Sony isn’t the only company to realize this. Samsung shuttered its paid music service earlier this year, and lots of other hardware vendors, including Nokia and Blackberry, have shut down their music services over the past few years as well.

One of the last ones standing is Microsoft with Xbox Music. But Satya Nadella’s cost-cutting course already put a halt to the company’s ambitious Xbox video production plans, and I wouldn’t be too surprised if we see the company shut down its music service soon as well.

Rdio launches in 24 additional countries

Music subscription service Rdio launched in another 24 countries Thursday. The list of new markets for Rdio includes the Cayman Islands, Haiti and Jamaica, and brings Rdio’s global footprint to 85 countries and territories. Rdio also announced a partnership with Caribbean mobile operator Digicel that will allow Digicel customers to stream Rdio for free for 30 minutes a day without counting against their data caps. As a comparison, Spotify is now available in 58 markets worldwide.

Spotify’s bet for short-term growth pays off

Spotify now has 60 million active users, and 15 million of those are actually paying users, according to a post on Spotify’s blog. The announcement comes just two months after the company revealed it had 12.5 million paying users, which means it grew around 17 percent in just two months.

That’s impressive, but also no accident: [company]Spotify[/company] launched a deeply subsidized promotion in early December, offering consumers three months of music for just $1. That price obviously helped to convince a lot of people to sign up — but as I noted back then, it was also designed to boost Spotify’s numbers in another way.

Spotify usually lets consumers try its paid service for free for a month. The downside of that approach is that the company can’t account for trial users as paying customers until the second month, when credit cards actually get charged. And had the company decided to give its users three free months, then it wouldn’t have been able to account for them until March at the earliest.

The promotion it unveiled in December on the other hand had users paying on day one, even if it was just one dollar. That means it was able to grow its paid user base a lot in a very short time frame — which matters for a company that tries to raise more money, or even go public.

Deezer buys mobile-focused Muve Music from Cricket / AT&T

Paris-based music streaming service Deezer has acquired Muve Music, the mobile-focused music service from Leap Wireless. Leap is a virtual mobile operator better known for its Cricket service, which was itself acquired by AT&T early last year. Details of the acquisition weren’t disclosed, but Deezer North America CEO Tyler Goldman told me during an interview at CES in Las Vegas this week that the acquisition was “material” for his company.

Muve Music has been a bit of an enigma for the industry; the music service was a huge success amongst Cricket users, and reached more than two million paying subscribers by the end of 2013. This made Muve one of the most popular subscription music services in the U.S., second only to Spotify. But part of Muve’s success was due to its close tie-in with Cricket, which at one point bundled the music service with all of its Android data plans.

Muve was also very much unlike Spotify and any of its better-known competitors in that it focused solely on music downloads as opposed to streaming, in part due to the lower data speeds for its customers. And Cricket operates as a prepaid business, which led some in the industry to wonder how much those Muve subscribers were really worth. I’ve talked to some industry insiders over the past few months who told me that AT&T asked for too much per subscriber, which may be one of the reason why the sale took so long: The operator had reportedly been looking for a buyer for Muve since at least May of last year.

However, Goldman argued during our conversation that the industry has been ignoring the typical Cricket customer, who tends to be lower-income and is more likely to be hispanic. He argued that catering to this audience is consistent with Deezer’s approach to online music, which is about segmenting the market. The company launched a subscription tier for HD audio aficionados last year, and has been looking to target other audiences with more fine-tuned tiers as well. “Almost every segment is underserved today,” he told me, adding that other services have been trying to sell the same product to very different groups of consumers. “That silver bullet strategy doesn’t work,” he said.

Deezer will offer Muve users a free trial, and afterwards only charge $6 per month, which is significantly cheaper than the typical $10 fee that competing music services are charging. It’s also a lot cheaper than Deezer’s high-definition audio service, which charges consumers up to $20 per month. Goldman said that the company plans to add tiers for additional segments over time, but also launch a bundle of multiple service components later this year.

Spotify’s new promotion: three months of music for just a buck

Still on the fence about music subscription services? Spotify would like to change your mind with some deep discounts: Three months of Spotify’s ad-free premium tier will cost new subscribers just $0.99, it announced Friday.

Spotify’s regular premium tier fee is $9.99 per month, but the service usually gives new users a one-month free trial. Under the new plan, this means that by signing up now they can save $19 over the course of their first three months. For Spotify, it means that users are starting to pay from the very first day, which could mean that they are less likely to cancel later on.

But there is also another side to this: Users who sign up for a free trial can’t be counted as paying users until the second month of their premium membership, whereas getting users to pay $1 for 90 days turns them into paying subscribers from day one. That looks better on paper, especially if Spotify was trying to raise more money, or if the company was trying to get itself in shape for an IPO.