SiriusXM

It's said that the premium in our digital economy is "attention" -- listeners simply don't have the time to consume every bit of content that's churned out. Your marketing needs to effectively attract audience, and your programming needs to be compelling to keep listeners. Certainly your potential audience is the world, but you have global-scale competition too. And new technology is constantly giving potential listeners new options across so many digital platforms -- print and video as well as audio. So what are the best practices to get more new listeners, and how do you get your existing listeners to listen more?

For this April's RAIN Summit West in Las Vegas, we've assembled the "Accelerating Your Audience Growth" panel to address these very questions.

SiriusXM knows about listeners. They ended 2012 with nearly 24 million subscribers, a record for the company. Sirius also reported $3.4 billion in revenue, also a record. We welcome to RAIN Summit Rachna Bhasin, SVP/Corporate Strategy and Business Development at Sirius XM Radio. Her background working for EMI Music will be valuable in our audience growth discussion.

Alan Burns (upper left) laid the groundwork for his Alan Burns & Associates research and consultancy firm with experience as a former major market program director, on-air talent, and researcher. Alan Burns & Associates produces the "Here She Comes: Insights into Women, Radio, and New Media" study.

ABC News Radio VP/GM Steve Jones (middle right) returns to the RAIN Summit stage. He's leader of a team that creates audio and text content for terrestrial radio, Internet radio, satellite radio, and mobile distribution -- including customizable news/lifestyle content for Slacker Radio. He's twice been awarded "News Executive of the Year."

Another returning RAIN Summit vet is Jim Lucchese (lower left) CEO of music intelligence company The Echo Nest. Jim's company powers many of the music services that "adapt" to a listener's tastes: Echo Nest APIs have been used for more than 350 apps for companies like Spotify, Nokia, Vevo, and Clear Channel's iHeartRadio. The Echo Nest raised $17.3m of funding in 2012.

The bulk of Internet radio's audience are Pandora listeners: 1.39 billion hours of listening in January, 65.6 million active listeners, and a 7.19% share of U.S. radio listening. Chris Martin, Pandora's VP/Engineering (bottom right), manages software development, quality assurance, customer support, device development, device certification, and production support. His efforts helped Pandora forge 20 U.S. auto partnerships and get the app in 85 different car models.

RAIN Summit West is Sunday, April 7 in Las Vegas. The annual full-day Internet radio conference is a co-located education program of the NAB Show. Now in its 12th year, the Summit focuses on the intersection of radio and the Internet. Keynoting the even will be RAB president and CEO Erica Farber (more in RAIN here) and Rhapsody International president Jon Irwin (more here). Register today, while flights and hotels are still readily available, via the RAIN Summit West page.

SiriusXM's custom streaming radio service is still in beta, and PCMag.com's Jeffrey Wilson can't wait for the official launch. He concluded his review, "MySXM gave me the personalization features I longed for while delivering the unexpected ability to filter my channels by favorite music eras."

The "MySXM" -- this is only for Internet streaming, and only for the desktop -- is currently limited to 40 channels. After launching a channel, the listener can customize the stream by adjusting three "sliders." The sliders scale the proportion of music of different Style, Popularity, and Era (in the image, the "My 70s on 7" channel can be balanced between "Soul/Disco" or "Rock" for Style).

SiriusXm hasn't yet announced when they plan to officially launch MySXM, but it will reportedly be available only on the desktop to start (though it seems likely to be ported to mobile devices as well).

Read the PCMag.com review here.

SoundExchange -- the record industry body that collects and distributes royalties for the digital use of copyright sound recordings -- passed along $462 million to labels and performers last year. That's 58% higher than 2011 ($292 million).

When Internet radio, satellite radio, or cable television radio in the U.S. plays copyright sound recordings, they pay a royalty for the use of that music. Not only to the songwriters and publishers (as broadcasters do), but also to the recording copyright owners (labels) and performers on the recordings. SoundExchange is the group that administers the latter.

Billboard explains, "The growth of this revenue stream underscores the importance of services such as Pandora -- and other webcasters -- and Sirius XM Satellite Radio in today's digital marketplace. Pandora, which supported the Internet Radio Fairness Act that could have led to a change in webcasters' statutory royalty rates, finished 2012 with 67.1 million active listeners, up 41% from 2011. Sirius XM added 2 million subscribers to finish the year with 23.9 million."

Pandora and SiriusXM pay the lion's share of SoundExchange royalties (some say as much as 90%).

Read more in Billboard here.

The recent CRB royalty decision for satellite and cable radio "for the first time, gives at least some weight to direct licensing deals," and "seems to reject some premises that had long been used to justify royalty rates in other proceedings – and thus may give some insights on approaches to be used in the webcasting royalty proceeding."

We're quoting industry legal expert David Oxenford, who has published some preliminary analysis of the Copyright Royalty Board's full determination of royalty rates to be paid to SoundExchange by Sirius XM and Music Choice from 2013 through 2017.

Last week the CRB released its full decision (actually, two separate decisions, resulting in the same determination, here and here). We reported the actual rates last month in RAIN (here).

We also reported (here) that in the proceedings, satellite radio provider SiriusXM revealed more than 60 direct licensing deals it had secured with record labels, which it argued should be used as benchmarks as the market value of digital sound recordings for noninteractive performance. The service says its direct deals are for 5%-7% of revenues.

Logically, the CRB agreed that directly-licensed sound recordings should be excluded from SiriusXM's royalty obligation to SoundExchange (services need pay SoundExchange only for copyright music for which they have not secured direct deals), Oxenford reports.

And while the CRB rejected SiriusXM's proposal to lower rates from 8% of revenue to 5%, it also rejected SoundExchange's proposal to raise rates -- starting at 12% of revenue in 2013 and ending at 20% in 2017. The Board decision -- 10% of revenue this year, rising to 11% next year, and 12% for each of the next three years -- might indeed indicate it took SiriusXM's market deals into consideration, as Oxenford suggests.

This is important to note as we approach CRB proceedings on Internet radio royalties. Broadcasters like Clear Channel and Entercom have struck streaming royalty deals with certain copyright owners. If the CRB is willing to consider marketplace deals in royalty determinations for satellite and cable radio, they may also be willing to do so in the upcoming webcasting proceedings.

The fact that webcasting royalty proceedings are governed by the controversial "willing buyer willing seller" standard, which by design attempts to replicate an "open market" value for copyright material, may be even more reason for royalty judges to consider these direct deals as benchmarks.

[Satellite radio and cable radio royalty proceedings are governed by the more traditional 801(b) standard. The main goal of the Internet Radio Fairness Act is to have Internet radio royalties to be moved to this same standard.]

The next royalty proceeding for noninteractive webcasting services begins in 2014 and should conclude in 2015.

Oxenford also reports that "the Board also explicitly agreed, for the first time in any decision of which we are aware, that pre-1972 sound recordings also are not to be included in the revenue base, as the Federal sound recording copyright only applies to songs created in 1972 and after (with certain exceptions...)." It will be interesting to see if webcasters are given a similar "pre-1972 carve-out."

Oxenford plans to follow up with more detailed analysis. Read his initial thoughts here.

During testimony in the recent royalty determinations (see yesterday's RAIN here), SiriusXM reportedly revealed it has secured "direct content licenses" with more than 60 labels, giving them even broader use rights at rates below those set by the Copyright Royalty Board.

Digital Music News reports SiriusXM will pay 5%-7% of its gross revenues for these licenses, covering more than 7,000 artists, 9,000 albums, and 110,000 songs (there were no reported details of how specifically the use of the licensed music is broader than is allowed by the statutory license).

These agreements are actual, real-world settlements between active players in the music rights market. As such, these deals (both the rates and expanded allowable uses of the music) will likely be cited in arguments against music industry interests who claim the CRB-determined rates for satellite radio (and webcasting, for that matter) are "below market value." It isn't clear whether the more favorable terms of these direct deals tempered the CRB's decision. 

As we reported yesterday, the CRB set sound recording royalties for satellite radio at 9% of gross revenue in 2013, increasing 0.5% each year (to 11% in 2017). Billboard estimates SiriusXM will pay between $1.02 billion and $1.22 billion in statutory royalties to SoundExchange from 2013 to 2017.

Hypebot reports SoundExchange pressed the CRB for satellite radio royalties that increased to 20% of gross revenue by 2017 (DMN says "one resident expert" pushed for 30%), calling the CRB rates "below market."

Last month industry attorney David Oxenford reported that much of the discussion in the rate-setting's oral arguments phase "focused on the value of music in a marketplace -– essentially the 'willing buyer, willing seller' question." Currently, the law mandates that the rate-setting for royalties for these media is to be governed by the "801(b)" standard (which the record industry has argued does not reflect fair market value) (RAIN coverage here).

In March Sirius XM filed a lawsuit against SoundExchange and the American Association of Independent Music (A2IM), accusing the record industry organziations of interfering with its efforts to directly license sound recordings. The complaint accuses SoundExchange and A2IM of being in violation of federal antitrust law, and New York state law (RAIN coverage here).

Digital Music News coverage is here. Read Hypebot here. Read Billboard coverage here.

SiriusXM CEO Mel Karmazin called ad-supported customizable Internet radio "a race to the bottom in terms of business model," as the quality of the user experience depends on a low spot load.

Karmazin, who announced last week he'll step down as SiriusXM CEO in February, spoke on his companies Q3 earnings call yesterday (his comments were reported by Billboard.biz).

"Those companies (ad-supported, personalized webcasters, such as Pandora) which can grow users and provide good customer experience usually have the worst business models," he said. He said fixing their businesses would take "a whole lot more commercials, and that means harming the customer's experience."

It will be interesting to see if SiriusXM puts Karmazin's idea into practice when the company launches its own online custom radio, which he promised it will by the end of the year.

"Not because we think it's a good business," he qualified, but because customers want it.

Read more in Billboard.biz here.