Pandora to Limit Free Listening, Citing Royalty Costs

Faced with rising royalty costs, Pandora will limit the amount of free music that its users will have access to on mobile devices.

In a blog post on Wednesday, Tim Westergren, the founder and public face of Pandora, said that a limit of 40 hours a month on mobile devices would take effect this week for its free service. The change, he said, would affect less than 4 percent of its more than 65 million regular customers, since its average listener spends about 20 hours a month on the service.

To continue listening, Pandora’s mobile users can upgrade to its $36-a-year paid version or switch to listening via computer. A spokeswoman for the company said the move was most likely temporary, but that it had no plans for lifting the limit.

The reason Mr. Westergren gave was the rising cost of its music licenses. Its per-song royalty rates have increased 25 percent over the last three years, he said, and are togo up 16 percent over the next two years.

“After a close look at our overall listening,” he wrote, “a 40-hour-per-month mobile listening limit allows us to manage these escalating costs with minimal listener disruption.”

The cost of music has been a persistent issue for Pandora, which by law pays a fraction of a cent in performance royalties each time a song is played on the service. That has tended to amount to 50 percent to 60 percent of the company’s revenue; it also pays a much smaller portion of its income to music publishers.

More than 75 percent of the listening to Pandora is on mobile devices, but while the company pays the same royalty for both desktop and mobile listening, advertising rates on phones and tablets is lower.

Last year, Pandora, along with Clear Channel Communications and various technology companies, supported the Internet Radio Fairness Act, a Congressional bill that would have changed the process by which a panel of federal judges sets the royalty rates for Internet radio services. The bill â€" and Pandora â€" came under aggressive criticism from the music industry and has not been reintroduced under the new Congress.

In an attempt to lower its publishing costs, Pandora last year also sued the American Society of Composers, Authors and Publishers, or Ascap, one of the major performing rights organizations. That case is pending.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.

Media Companies, on Defensive About Violence, Plan Campaign on Parental Control

Major media companies, facing criticism about the level of violence in their content, are initiating a campaign intended to make parents more aware about ways to limit exposure to violent entertainment.

Representatives for the companies said in a joint news release on Wednesday that they are planning to “roll out a national multimedia campaign” for parents. The effort comes amid renewed scrutiny of film and television violence in the wake of the massacre at Sandy Hook Elementary School in Newtown, Conn., in December.

Some lawmakers and pro-gun activists have pointed fingers of blame at shows, films and video games. Even President Obama, in a speech last month proposing new gun control measures, referred to the need to rethink the way violence is often glorified in entertainment offerings.

At least one activist who was scheduled to testify at a hearing about a proposed assault weapons ban on Wednesday said she was going to encourage “a true discussion about the culture of violence” rather than a ban on certain weapons.

The speaker, a former Republican member of Congress, Sandy Adams, said in her prepared remarks that the combination of violent video games, violent movies and “the desensitizing of death, blood and gore intheir everyday lives is only making the culture more violent.”

The new campaign by the television and film industries and their lobbyists might be seen as a rebuttal to that point of view.

In the news release on Wednesday, representatives for the industries said they would “make a positive contribution to the national conversation on violent behavior by launching a national educational campaign through communications channels including television public
service announcements, educational and informational websites, in-theater advertising, and other media.”

The industry representa! tives include the lobbying groups for filmmakers, theater owners, broadcasters, and cable operators. They said the public service ads would appear on television and on the Web in the months to come. The ads will remind parents about the existing television and film ratings systems and the parental controls that are built into most television sets. Ads about the film ratings system will also be shown in movie theaters.

The industry representatives will also promote Web sites about parental controls, including TV Boss, which includes information about how to “block unwanted programs” and “be the boss of what your child watches.”

Since the shootings in Newtown, the industry’s main message in response to criticism has been that parents have a wide array of media choices at their disposal and have the ability to control the choices their children have.

Separately, makers of violent video games have been conveying similar messages while steeling for a political battle over potential reulation, as The New York Times reported last month.

History Shadows an Upbeat Music Sales Forecast

In early 2004, Billboard magazine ran a cover story with a hopeful headline: “Have Sales Finally Hit Bottom”

The answer, as anyone who has paid attention to the music industry knows, was a most definite no. Aside from a couple of positive blips along the way, the recorded music business â€" shaken by digital media, the Internet and the loss of thousands of record stores â€" has been in precipitous decline for more than a decade.

So for those who have seen the industry’s optimism dashed before, an upbeat report on Tuesday by its global trade body, the International Federation for the Phonographic Industry brought hope and skepticism. According to the report, the trade (or wholesale) value of global recorded music sales in 2012 was $16.5 billion, up 0.3 percent from the year before, the international market’s first year-over-year gain since 1999.

Digital music was responsiblefor much of that growth, such as it is. In developed markets like the United States, people are buying more digital files and starting to subscribe in significant numbers to streaming services like Spotify. (They are also getting less and less music through unauthorized peer-to-peer networks, according to another report on Tuesday by the NPD Group, a consumer-research firm.) These services are also rapidly spreading overseas. “Major” ones like iTunes, Spotify and Deezer are now available in more than 100 countries, up from 23 just two years ago, according to the I.F.P.I., while some countries, like Kenya and Vietnam, saw their first digital music services open last year.

“Digital is saving music,” said Edgar Berger, Sony Music’s in! ternational chief.

Those trends are all positive, and if they continue they could allow the music industry to earn money in areas once thought completely spoiled by piracy. But despite this good news, there are still some possible problems, as well as questions about how the new digital economy will work.

One issue is the future of of CDs, which still represent the majority of sales (and industry revenue) around the world; in Japan, for example, the world’s second-largest music market, CD sales are actually growing. But these are under threat from the loss of stores like the HMV chain in Britain, which recently entered bankruptcy proceedings, and from shrinking shelf space at brick-and-mortar stores everywhere.

And while the I.F.P.I.’s report trumpets Sweden, Norway and India as exemplary digital markets, it is unclear what the rest of the worldcould learn from them. India’s legitimate music sales are a tiny fraction of its overall entertainment spending, in large part because of piracy, and as Glenn Peoples at Billboard has pointed out, Norway’s population is about the size of Kentucky’s.

The popularity of digital music services itself poses some difficulties. In the United States, rising competition and thin operating margins could force subscription services to reduce their prices from the current standard of about $10 a month; according to some reports, Spotify may already be pushing for this in its latest round of label negotiations. Lower prices could help these services attract millions of new customers, but they would likely also further reduce royalties, an issue that has drawn serious concern among artists and their advocates.

So what does it mean to “save” the music industry Few expect! the busi! ness to ever return to the salad days of 1999, when worldwide trade revenue was about $29 billion, and the world had just seen the arrival of the peer-to-peer system Napster. Many artists have long since adapted to the idea that recordings will no longer be their biggest source of income, even if they may be the foundation around which the artists build a more diversified career.

For the record industry, it may be too soon to declare victory. But the I.F.P.I.’s report, along with other data and analysis, make a decent argument that the bleeding has at least been stanched. The industry’s challenge is to expand digital services more quickly and more profitably than the rate at which CD sales die out, and it looks as though that has finally been achieved.

Yet another report on Tuesday gave a glimpse of how success might look. The report, by the British media research firm Enders Analysis, had a rosy title: “U.S. Recorded Music Gets Some Mojo.” It said that music sales “touched bottom” lst year and projected that retail sales in the United States, estimated at $5.3 billion last year, would reach $5.7 billion by 2016, a growth of 7.5 percent over four years.

That may be billions less than the industry was making at its peak. But at least it is not less than it makes now.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.

Edelman Names Executive for New Content Role

The race to take advantage of new ways that consumers read, watch and listen to content â€" and how marketers want to sponsor those initiatives â€" is leading a giant public relations agency to name a senior executive to a new, content-centric post.

Steve Rubel, who had been executive vice president for global strategy and insights at Edelman in New York, part of Daniel J. Edelman Inc., is being named the agency’s chief content strategist, effective Wednesday morning.

Mr. Rubel, who has worked at Edelman since 2006, will be responsible for efforts to maximize the benefits of content appearing in various forms of media â€" paid, earned, owned and shared â€" on behalf of clients. He will report to Jackie Cooper, who was recently named global chairwoman for creative strategy.

Such efforts are all the rage on Madison Avenue as advertisers become increasingly interested in innovative forms of presenting pitches in realms like social media. There are discussions about, for instance, marketin in real time, like the posting of comments to Twitter accounts as news events take place, and whether brands ought to support content-creation units that operate around the clock like newsrooms.

The new buzz phrase for all that is content marketing, although it is also being called content advertising and native advertising. Some are sticking to more familiar terms when they discuss the trend, like branded content, branded entertainment and advertorials.

“We’re seeing a changed competitive landscape,” Richard Edelman, president and chief executive at Edelman, said in a phone interview on Tuesday. “All of a sudden, clients are open to ideas from P.R. firms, digital agencies, media-buying agencies, not just creative shops.”

In fact, this week, a media agency, Mindshare, part of the GroupM division of WPP, said it had started a content marketing practice and named a longtime executive, Stacy Minero, to oversee it as head of content marketing and strategic partnerships for the United States.

“We’re being asked to be a force in this new area,” Mr. Edelman said, and the agency is accepting the challenge, “partly for offense and partly for defense.”

The Edelman agency has already been working on content marketing assignments, he added, citing an example of a sponsored article on BuzzFeed.com, on behalf of the Schick division of Energizer Holdings, that turned the “photobombing” phenomenon in social media into “razorbombing.”

Mr. Rubel, who joined Mr. Edelman for the interview, said he welcomed his new post.

“I’ve been in the P.R. business for 20 years, and I’ve never been more excited,” said Mr. Rubel,43. He likened his task to “putting a content engine inside Edelman” that “complements the great work we’ve been doing for 60 years.” (The agency was founded in 1952.)

“A lot of questions need to be worked out” as content marketing proceeds, Mr. Rubel said, particularly the “church/state” question â€" that is, the separation of the editorial and business sides of the media that are being asked to work with advertisers on content marketing. There are concerns that blurring the line between editorial content and ad content will diminish the value of the media in which the ad content appears.

“I want to be there to be part of those conversations,” Mr. Rubel said.

He is, at least when it comes to one form of social media: Mr. Rubel has more than 76,000 followers on Twitter.

The Breakfast Meeting: A Loss at DreamWorks Animation, and a Cute Interspecies Rescue Was Fake

DreamWorks Animation reported an $82.7 million loss in the fourth quarter after taking an $87 million write-down related to the flop “Rise of the Guardians,” Brooks Barnes reports. DreamWorks shares dropped 1.3 percent in regular trading and less than 1 percent in after-hours trading. Jeffrey Katzenberg, the company’s chief executive, said there would be layoffs of around 350 of the company’s 2,000 employees.

An adorable and widely disseminated YouTube clip that appeared to show a pig rescuing a goat struggling in water was, in fact, carefully staged, Dave Itzkoff reports. The video was shared on Twitter by Time magazine and Ellen DeGeneres; broadcast on NBC’s “Today” show and its “Nighly News” program, ABC’s “Good Morning America” and Fox News. (Brian Williams, anchor of NBC’s “Nightly News,” said “we have no way of knowing it’s real” when the video aired.) The video was staged for “Nathan for You,” a show that will debut on Comedy Central on Thursday. Nathan Fielder, the show’s host, said that the media attention was completely unexpected. “If we were trying to pull an elaborate hoax on the news, I think we could have pushed further,” he said.

Twitter hashtags tied to TV shows saturate many broadcasts, allowing stars and producers instant feedback. Shows are now working to close the feedback loop and incorporate those instant responses on the air, Brian Stelter reports. For instance, “American Idol” will start using Twitter to poll its audience on Wednesday and will incorporate the results into a “fan meter”; the show’s pr! oducers hope it will engage younger viewers and encourage people to watch live so that their Tweets are added to real-time results. The most successful way to combine social media and television appears to involve true interactivity rather than “talking to” an audience, said Mark Ghuneim, a co-founder of Trendrr, a company that tracks online chatter about TV shows.

Bounce TV, a network that features programming developed for African-American audiences, is hiring new ad-sales employees and opening a New York office after selling commercial time to blue-chip marketers like General Motors, McDonald’s and Johnson & Johnson, Stuart Elliott writes. Bounce TV reaches 77 million American television homes and 86 percent of African-American television homes, Jonathan Katz, its chief operating officer, said. The moves also come after Nielsen began to measure viewership and issue ratings or the network.

ABC News is shoring up its political coverage with a few high-profile hires, Dylan Byers reports on Politico. ABC News’s president, Ben Sherwood, has been courting political reporters from The Washington Post, The New York Times and other outlets to strengthen the network’s Washington bureau after several departures. The network announced the hiring of New York Times political reporters Jeff Zeleny and Susan Saulny this week, which may be an indication that it plans to change the nightly news broadcast’s focus from human interest pieces to more political fare. ABC News’s political coverage already has a strong online presence, through its partnership with Yahoo News, Mr. Byers writes.

Christie’s Honeymoon With Conservatives Is Over

In September 2011, when Gov. Chris Christie of New Jersey was considering making a last-minute entry into the presidential race, I pointed out an incongruity in Republican attitudes toward him. Many Republican organizations and activists, including some very conservative ones, were enthusiastic about the possibility that Mr. Christie might enter the presidential race. But Mr. Christie’s history of actions and issue statements was fairly moderate.

Roughly 18 months later, the attitude toward Mr. Christie has changed. Mr. Christie has not been invited to the annual Conservative Political Action Conference, or CPAC, which will gather next month. Mr. Christie’s failure to be inited is not a mere oversight; virtually every other prominent Republican who might be a plausible nominee in 2016 has been asked to participate.

Isn’t it premature to conclude very much about 2016 dynamics based on something that is happening in February 2013

Actually, as I wrote in my piece on Marco Rubio week, the Republican primary is already under way. Candidates like Mr. Rubio, Rand Paul, Jeb Bush, and Bobby Jindal are already positioning themselves with an eye toward 2016.

The broader public certainly won’t be paying much attention to what they do or say for a very long time. But the nomination process is as much an inside game as an exercise in voting. The candidates who perform well in the so-called invisible primary â€" the phase of the campaign when candidates seek to accumula! te scarce resources like money, endorsements, staff talent and favorable relationships with the news media â€" will be far better positioned to succeed once voters in Iowa and New Hampshire get to have their say.

The veto of Mr. Christie by CPAC, which represents a relatively broad coalition of conservative and Republican interest groups, is an ominous sign for him. Candidates who have won the CPAC straw poll in the recent past include Mitt Romney and Rudolph W. Giuliani, other Republicans with whom some conservatives have had considerable disagreements. So the fact that Mr. Christie has not even been invited to the conference this year says something.

Mr. Christie was in good graces of CPAC as recently as last June, when he was the headliner at a regional conferene the group sponsored in Chicago.

So what has changed Is it Mr. Christie, or is it CPAC

In fact, I’m not sure that either has. Instead, what seems to have changed is the salience of different issues, as driven by major news events over the past year.

Mr. Christie has long been an advocate of gun-control policies, for example. But that issue has become far more relevant since the shootings in Newtown, Conn.

Mr. Christie has also taken moderate positions on immigration. Immigration was an issue in the 2012 campaign, but it seems to have grown in importance now, after the poor performance of the Republicans with Hispanic voters November, and the push by President Obama and by some Republicans in Congress for immigration legislation.

Of course, there was Hurricane Sandy, which yielded Mr. Christie’s literal and figurative embrace of Mr. Obama, and h! is later criticism of Congressional Republicans for failing to pass a disaster-relief bill. This is an important symbolic issue, but would Mr. Christie have behaved differently if the storm had hit in 2010 or 2011

And on Tuesday, Mr. Christie became the eighth Republican governor to announce that he will accept Medicaid expansion under the president’s health care law, in spite of his party’s general opposition to the law.

Contrast this to the political climate in late 2011, when Mr. Christie was winning praise from conservatives for his statements toward teachers’ unions â€" an issue that was then in the news because of the protests against efforts by Gov. Scott Walker of Wisconsin to curtail benefits for public-sector unions in thatstate. Mr. Christie also takes relatively conservative views on gay marriage and abortion, social issues that had the stage more to themselves in 2011, but which may have to compete more against immigration and gun control in the next political cycle.

So far as I can tell, Mr. Christie hasn’t changed his positions on any of these issues very much. Rather, it’s that Mr. Christie had a number of relatively moderate positions to begin with, along with some conservative ones.

Does that mean there could be a reconciliation between Mr. Christie and conservative groups later on It’s certainly possible. Surely the news cycle will shift again. And Mr. Christie could shift his stances to the right, especially once he secures re-election in New Jersey next year, as he is heavily favored to do.

But my premise when I wrote about Mr. Christie in 2011 was that conservatives had been underrating how moderate Mr. Christie was â€" perhaps because they were so desperate at that time to find alte! rnatives ! to Mr. Romney and their other candidates. Now that he’s been “outed” as a moderate, it may be hard to close the closet door.

Mr. Christie, meanwhile, will need to consider whether to compete for the Republican nomination in 2016. While the mainstream media tends to chronically overrate the likelihood of a viable independent bid for the presidency, Mr. Christie would be better positioned to seek one than most, with very high favorability ratings among independent voters and the access to money and news media attention that comes from being a prominent politician in the Northeast. Or he could shoot for another office. Because of the ethical cloud surrounding Senator Robert Menendez, the Democratic incumbent in New Jersey, the Senate race in New Jersey coud be very competitive in 2018.

Mr. Christie’s relationship with conservative Republicans, however, may have been doomed from the start.