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Music Business News, August 1, 2017

Pandora shut down in Australia and New Zealand. And Facebook moved further towards the music industry. Also, Sony streaming revenue was up in its first quarter of 2017.


Pandora No More in Australia and New Zealand


Pandora announced it is shutting down business in Australia and New Zealand after five years. Roughly five million registered users were locked out of their accounts permanently on July 31 after receiving a message stating, “We’re honored to have connected so many listeners with the music they love these past few years. Thank you for your loyalty and the opportunity to serve you.”


According to Hugh McIntyre at Forbes, this move comes on the heels of other indicators that the company is in trouble: ongoing financial troubles; loss of Tim Westergren as leader and general sustainability problems.


Pandora has had region-specific apps and programs running in Australia and New Zealand since 2012. That year the company was at its height and keeping up with current streaming leader Spotify.


The loss of Australia and New Zealand means Pandora is only in the U.S. Pandora’s reach is limited by radio laws, which make it difficult and expensive for the company to open offices and launch services into other territories.


CEO and co-founder Tim Westergren recently left the company along with President Mike Herring and CMO Nick Bartle.


Annual financial reports indicated that while Pandora is experiencing some growth, it continues to fail to be profitable. The company earned $1.39 billion last year, up 19 percent from 2015. However, its losses grew to an unsustainable $343 million.


Facebook Buying Source3


Facebook bought Source3, a New York City-rooted rights management company that analyzes “branded intellectual property in user-generated content.”


Music Business Worldwide pointed out that this shows that Facebook plans to use the technology in its Rights Management platform to crack down on copyright infringing videos that show up on Facebook.


Experts indicated this purchase may mean Facebook is working on moving into the music space. Source3’s co-founders are Patrick Sullivan and Ben Cockerham, who also co-founded Rightsflow, a music IP-centered rights management tool sold to Google in 2011.


Before the duo started Rightsflow in 2007, Sullivan was VP of music distribution at The Orchard and expanded the company to EMEA, US, LATM and Australasia. He was also formerly VP of Licensing and Royalties at eMusic and spent three years as Director of Research and Development at the National Music Publishers Association. He got his start at the Harry Fox Agency in the late ‘90s.


Sullivan’s partner Cockerham also worked at The Orchard and was a product manager at YouTube.


A statement on Source3’s blog read, “At Source3, we set out to recognize, organize and analyze branded intellectual property in user-generated content, and we are proud to have identified products across a variety of areas including sports, music, entertainment and fashion. Along the way, we built an end-to-end platform to manage online IP and establish relationships with brands … Today, we wanted to let everyone know that we’ve decided to continue our journey with Facebook. We’re excited to bring our IP, trademark and copyright expertise to the team at Facebook and serve their global community… who consume content, music, videos and other IP every day.”


Former YouTube employee Tamara Hrivnak became the head of Facebook’s global music strategy in January. Facebook also hired a Label Music Business Development Lead and a Music Business Development Manager and indicated it planned to work collaboratively with music services like Spotify.


Analysts have also speculated that if Vevo ever left YouTube, it may gravitate towards a partner like Facebook, which recently surpassed 2 billion active monthly users. YouTube’s monthly active user base is at 1.5 billion.


Sony Streaming Revenue Up in its First Quarter


Sony’s income was up significantly in its first quarter of 2017, with revenue up 18.8 percent from last year at the same time.


Billboard reported that the boost was largely driven by streaming and physical sales as well as mobile games.


Sony’s music arm is Sony Music Entertainment, Sony Japan, Sony/ATV Music Publishing and 39.8 percent of the net income of EMI Music Publishing. Also included is its Visual and Media platform including revenue from the production and distribution of animation titles and service offerings for music and visual components.


This quarter is Sony’s best overall fiscal quarter since 2009.


Streaming generated $346 million, up 25.4 percent from 2016. Also, physical sales grew by 16.2 percent from last year. Digital downloads were down 22.1 percent.


Sync, merchandising and live music promotions were also up by 15.1 percent from the previous year.


Streaming was 38.5 percent of total revenue and downloads were 13 percent. Physical sales are still 32.2 percent of overall revenue for Sony.


Sony Corp. predicted that its overall music operations will bring in an operating income of 75 billion yen on an overall revenue of 630 billion yen by the end of its current fiscal year on March 31, 2018.

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