As Streaming Music Grows, It Starts To Consolidate

The streaming music industry is transforming quickly.  Apple buys Beats and creates Apple Music, then closes Beats.  Jay Z buys Tidal to bring the art of the music to those with a passion for high fidelity.  And today we learn that Pandora plans to buy out Rdio.  Per reports, Rdio must first declare bankruptcy before Pandora can buy out all their assets and hopefully retain most of their subscribers.  I'm surprised that Apple was not mentioned as a possible suitor for Rdio, but such is the fast changing nature of this industry.

With Pandora and Spotify still the market leaders, one wonders if Apple sees an opportunity as a niche player in this market or a desire to buy out one of the top dogs.  And given the employee turnover at Tidal, one can wonder how much longer they will be in the mix.  As I wrote last week in my blog on free music, streaming subscription music services still have to compete with commercial radio, many that have created their own apps to provide an alternative choice.  If you don't mind the commercials, its not a bad alternative.  Heck, even Sirius, the paid car and streaming audio service has channels that include commercials too. 

As for Rdio, the ride was a short one.  You will be a footnote in the history of streaming music but not the only one as consolidation is likely to continue.  The pace of change may be quicker but it is the nature of a very quickly changing media landscape. 

The iPad Pro Goes Big

While Millennials seems to enjoy their smaller smartphone screens over a tablet, they like the larger size smartphones over the smaller screens.  So the introduction of the iPad Pro, a much larger size screen seems counter intuitive to the mass appeal audience.  Walt Mossberg, in his re/code review, doesn't see the iPad Pro as a replacement for the laptop.  I agree.  I believe the laptop is uniquely qualified to handle certain applications, and especially useful for student and business applications.

Still, I believe the iPad Pro can find a strong niche use in commercial and industrial applications.  The added value of the stylus may be appealing to some, although the shear size of the screen may be the most important feature.  Will the average consumer want to go big with the Pro?  We will have to watch the Christmas Holiday sales to see who might be purchasing the device. 

Time Warner Wants A Piece Of Hulu

Time Warner wants another streaming business and that might include a piece of Hulu.  Per Deadline Hollywood, they are in early discussions to take a piece of the pie and join the Disney, Fox, NBC partnership.  But does it make sense?

I ask that question for a number of reasons.  First, they already own HBO Now and HBO Go and have a successful platform and subscription business that they control 100%.  Second, the idea of being a partial owner in Hulu will only add to the dysfunction of running the Hulu brand.  The old adage that "too many cooks spoil the broth" means that one more owner will further handcuff the strategic growth and tactical abilities of the Hulu brand to grow.  And third, that Time Warner's other cable content brands lack enough quality content to be anything more than long tail entertainment. 

Can an investment by Time Warner in the Hulu business draw a positive ROI?  I am sure the financial analysts are asking all the same questions in determining how to best improve revenue.  There is no guarantee of success.  Time Warner only needs to look internally at some of their failed networks like CNN SI, the Sports Illustrated Network.  I am sure there are other misses as well.  That is not to say an investment in digital doesn't make sense; but, wouldn't you rather have total control in your next business opportunity then a 25% position.

What's Wrong With Free Music

The rise in premium music services shouldn't surprise me, but it does.  I grew up on AM and FM radio and enjoyed listening to everything from talk to news, pop to Dr. Demento.  In exchange for free music, I also heard ads that ultimately paid for all those stations to air.  Today, a number of these same stations offer commercial-free blocks to entice us to stay connected, but we find ourselves with more and more choices, many requiring a monthly subscription fee.

Sirius and XM Satellite, who later merged, seem to have started this game of offering a premium experience while sitting in your car.  Sirius brought Howard Stern over from free radio and many joined him in his move.  Today, fans of music can pay monthly fees to listen to streaming radio from choices ranging from Spotify and Pandora to Apple Music.  And today's NY Times reminds us that your Amazon Prime subscription includes both a video platform as well as a music platform.  And consumers seem willing to pay for the milk when it is also available free. 

Is it the greater choice, the lack of ads, the portability, the freedom to choose what to play next, the convenience?  They all come to play.  We have switched from carrying a portable transistor radio to carrying our smartphone and technology has played a large role in opening up new competition.  But I still come back to the point of free verse pay.  Commercial radio stations also present themselves online as well, as easily acceptable as any paid app.  The music industry certainly presents itself as a terrific case study in the world of content vs. distribution, free vs. pay.  How it continues to evolve remains to be seen. 

ESPN Not In Trouble, Despite Firing 300 Employees

ESPN parent company, Walt Disney, released its quarterly financials last night and let us know that the Magic Kingdom is as healthy as ever.  Profits and revenues have both grown and the media division that includes ESPN rose 27% from the period last year.  According to the NY Times, "Disney said the increase was primarily due to higher ESPN affiliate and ad revenues, partly offset by higher programming costs".  Yet, as a Christmas present to 300 employees, they received their layoff packages.

ESPN and Disney are not suffering.  In fact, their bottom line was never stronger.  No the decision to fire 300 employees was to appease investors and not the business.  I don't mean to suggest that Disney or other public companies need to be charity centers to their employees; but, couldn't ESPN do something else with these 300.  Given the diversification of the empire, why couldn't these 300 be given internal opportunities to apply to other divisions within the company.  They have already demonstrated a fit to the organization, many have provided multiple years of impressive service and their experience might be truly welcome as other lines of businesses seek sales, marketing, production and other types of support.  I doubt that ESPN or Disney even considered that option.

So ESPN laid off 300 employees only to tell us that the company and brands are "stronger than ever".  I just don't believe the two stories jibe.  Thoughts?

Digital Killed The Television Star?

If you remember back when MTV first emerged, the first music video was "Video Killed The Radio Star".  It spoke to the demise of the old media with the rise of music video.  It was certainly not true, radio did not die, although it too was changed as the result of technology.

Today, it is television that is being affected by the rise of new media, digital and streaming media.  Consumers no longer are tethered to a box; rather, the screen moves with us and we control when and where we want to watch.  It has led to cord cutting, not just because of the freedom of movement, but because the cost to access on a tethered box has gotten too high. 

We want smaller bundles at lower price points.  Netflix provides its bundle of TV shows and movies for a low monthly fee and Amazon, Hulu, HBO, and others each do the same.  And as consumers we can pick which of these services we wish to carry.  With cable television, the appeal of their large bundle of shows and movies, linear and on demand, diminished as the price of carriage kept rising faster and faster.  The biggest culprit of that rise has been sports programming and the demand to license its content has enabled more channels to carry a piece of sports.  Where a decade or more ago, sports was the exclusive home to a few nets; today, games are seen on dozens of regional and national sports networks.  And consumers paid for access to each and everyone of these nets to be accessible on basic cable.  Ultimately, consumers pay too high fees for too many networks they may not want. 

Has digital killed the Television star, of course not.  Neither did video kill the radio star.  But digital has changed the playing field so that consumers have more control to cut the cord when their primary source for video has gotten too expensive.  Lesser expensive options with a diverse supply of streaming video now makes the choice to cut the cord easier to make.  Digital has changed the playing field and it is time to rethink the cable bundle. 

Stock Market Worried About Cable Networks

When Time Warner Inc. announced lower earnings expectations in the future, the stock market responded by selling off a list of cable network stocks.  From Time Warner to Discovery, from Disney and Viacom to AMC, a consistent sell off was evident.  But what drastically changed?  Just a week or so ago, ESPN cut 300 jobs to lower costs and hopefully improve earnings.  Cord cutting has been much discussed over the last number of years; in fact, many cable operators have been posting much smaller sub losses in their latest quarter.  And content companies have been pursuing new streaming deals and other revenue lines to boost earnings.  So what really changed?

Sure, the announcement that Time Warner Inc. now expected lower earnings in the near future. But just yesterday, its premium network HBO announced it was the new home for future Jon Stewart content.  And that news was positively received.  As to the daily price fluctuations of media stocks like Time Warner, Inc., the likely means to restore earnings will be to cut costs.  Expect some layoffs from a number of these companies to boost earnings for its stockholders. 

Star Trek Boldly Goes Back To CBS

For Trekkers, or Trekkies, the news that another Star Trek series would be coming back to television was met with very loud cheers.  That it won't be seen for 15 months, not until January 2017, tempered that applause.  Star Trek, first created by Gene Roddenberry in the 1960's, has seen itself grow from TV show to movies back to TV show and back to movies with different casts embracing the sci fi drama.

CBS seems to be using this popular series in a two-fold strategy with first-run episodes appearing on the flagship CBS network and subsequent runs of the show seen exclusively on its streaming subscription app, CBS All Access.  Currently, the $5.99 monthly app offers other CBS programs including the original Star Trek episodes. Is the Star Trek universe large enough to entice more subscribers to CBS All Access?  Probably not but I would be on the look out for more deals to be announced like this.  As CBS is not an owner in Hulu, this streaming property is their own strategy to retain the CBS brand in a digital world.

As to the new Star Trek series, little is known about the series.  Its place, characters, story lines are all a mystery for now.  But for those waiting for the follow up to Star Trek Enterprise, we will boldy go where CBS takes us. 

Note:  Some are suggesting that CBS will air only the first episode on CBS with the remainder of the season exclusively on CBS All Access.  Will that encourage consumers to subscribe to the service or fail miserably?  I think it would be a mistake to all of its constituents from the TV viewer to the local affiliate, from the cable operator to the cable subscriber to not air the series first on broadcast. The greatest revenue opportunity for CBS still lies with traditional television. 

Serial Adds Another Platform

The popular podcast Serial, known for its analysis of the Adnan Syed murder trial, has expanded its distribution platform.  Previously, Serial was only available as a free downloadable podcast, but the next season's episodes will also be available on Pandora.  Good news for those that don't know how to download a Podcast.  It should continue to be available for Pandora.

As a fan of Serial, part of me would hope that they would deliver a new update focusing on what has transpired and changed since their report was first made.  It seems that may not yet be in the cards.  Some expect that season 2 of Serial will instead focus on U.S. Army soldier Bowe Bergdhal who deserted his post.

According to Polygon, Pandora will put season one on their site later this month.  The date for season two has not yet been released.