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Pandora CEO Joe Kennedy on the company’s outlook and efforts to achieve fairer costs for its content.
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As you remember yesterday pandora got smacked in the after -- session and today follow through not singing the sweet tune it all the shares tumbled more than 17%.
Following the earnings release while most numbers came in above analysts' estimates.
It was their guidance that was well below what many for hoping for talk -- a swing to a -- the stock suffered a number of price cuts today from analysts but interestingly enough.
Didn't get any downgrades outright could it be because they believe that there are certain economic trends seasonal trends at play here that eventually the company will really be able to overcome -- well this is what we found out from pandora CEO Joseph Kennedy today here's what he had to say.
There definitely is a seasonality to our business that the ad spend work consumer service obviously and so were tied to how.
Consumer advertisers spend during the year and they don't spend evenly throughout the year January is historically.
A week month and we have some concern there might be you -- even weaker than usual this year because of some of the overall macro economics but if we look forward to before your next year.
We actually are very excited about the opportunities we have in particular to continue to grow what's your ship.
And to continue to improve our mobile monetization.
-- the one thing that you haven't been able to clamp down on our higher royalty costs and it needs basis interesting and kind of annoying conundrum I'm sure for US what was shareholders and that is.
With more and more active listeners and you cuts are growing there's no denying that.
You have to face higher and higher royalty rates the question then becomes.
What are you going to do about that short of waiting for the Internet -- -- it -- actor really come through by congress.
Well certainly in terms of just the financial performance of the business that -- key for us is to grow our revenue faster than our -- that's how we get leverage.
In the business because of the structure of the content costs at the same time -- -- him.
To achieve what we believe would be a fairer a level of content acquisition cost.
Obviously we have legislative efforts underway credit regardless of what happens from our congressional standpoint.
Will participate in the next royalty arbitration which will start 12014.
Right and won't set rates for 2016 through point one humor very much looking forward.
To making our case and arbitration.
But I'd get that -- but we shouldn't just sort of toss off the Internet radio fairness act is legislation on whatever happens there because.
US are actually face for people who don't understand it's an unfair structure and that is that for example satellite radio pays like 710% royalty fee it knew it in Internet radio -- 50%.
Is that of the heart of your problem or is it something else is that the competition is out there with Spotify and I heart radio on possibly apple turning its iTunes in -- I radio -- that it's.
If that URL -- taken yet.
Well we continue to make very strong financial progress within the context of the race -- -- paying.
But those rates as you alluded to are unfairly high won't -- almost 250 million dollars this year.
That's not only more than any other radio company in the US is more than -- -- company on the planet.
It's more than the entire radio industry in the UK as morning entire radio industry in France -- just.
In an unprecedented.
Level of royalties and we're just 7% a radio listening you know.
You know you kind of don't have got some conservatives at which surprisingly I would think that they would be sort of for this but -- -- -- at some conservatives.
In congress saying.
That you shouldn't have congress dictating what should be royalty rates that it should just be left open to being the Fed and the free market to agree with -- I think and neither we nor actually the recording industry agree with that I think.
Our radio in this country and around the world for decades has been subject to compulsory licenses you literally can't have.
Tens of thousands of radio stations making individual agreements with hundreds of thousands of artists -- just.
Actually falls down from a market efficiency standpoint we don't want congress to set the rates for -- from the sort of structure in place that.
Can consistently deliberates -- all parties artists.
Innovative services.
Now all agree upon and that ultimately serve the American listening public.
I can't let you go without bringing up and don't rolling your eyes because I know you're tired of probably talking about it but the stock does move every time it floats in the market and that is if apple were to enter.
The Internet radio space you guys face these royalty issues.
Effectively they have dealt with that through iTunes and they would have that so many names that are.
At people's up listeners fingertips to choose forward -- basically what could be a listening choice.
-- not talk to Tim Westergren your your founder and he says it's it's basically the playlist stupid and I get what he's saying but when people put up quite an effective playlist under iTunes.
What are you going to do about facing any threat not just apple.
And I think the only answer is what -- focused on it every day for the last eight years -- -- to build the best literally dog best personalized radio experience in the war.
We think we've done that we work hard every day to expand our leadership on that we rolled -- ten -- for not know.
About a month ago it's been very well received by consumers and just literally being the best in the war where we do adapt particular focus on personalized radio.
That really is how we beat all the competition that we face the last seven years and we think that's really the plan for addressing any competition and arises going for.
So what's the most popular -- -- -- David loves Brazilian.
Because he has an account but guess what.
Christmas music in December is 20%.
Of their listening audience who said the people just discover pandora to their Christmas music and you -- You can focus at -- I want Bing -- -- -- what I want now Mariah Carey of Ireland's problem the last time we had -- mind I asked him whether he was gonna increase in the amount of commercials they have they have they've doubled the amount of increase before is about to.
Per hour announce about four per hour that grates on people a lot but that playlist capacity they have to figure out exactly what it is you want depending on your mood is extort nobody has a play list as good and his -- towards your temperament.
As pandora has so we we we wish him the best but they did have a huge dropped it was at 70% loss plus.
All right -- so.
