Wildcard Wednesday . . .

IS UPFRONT-MEGGADON UPON US?:  Next month the top global ad spenders and their agencies will gather in NYC for the annual TV Upfronts.  While the presentations themselves will be the normal song-and-dance of new shows and content integration opportunities, there are two larger issues which may overshadow the networks’ pitches.  The first is the steady decline of traditional TV viewership.  As noted in the attached Business Insider article and in the graphic below, TV viewership is basically being propped up by 65+ consumers (not exactly an in-demand advertising demo), while anyone 49 yo or younger is fleeing the medium.  That’s a long term problem for the networks.  On the other side of the coin is the recent brand safety dilemma plaguing digital publishers and their video products.  With so many brands boycotting OLV you can bet they’ll look to place more weight in the safety of traditional TV.  What’s the bottom line to all of this?  With less ratings inventory than ever before and newfound demand from OLV pullbacks expect to see some pretty aggressive price spikes.  So fasten your seat belts for a very interesting Upfront season!

SPOTIFY INKS UMG LICENSING DEAL:  Spotify finally had a breakthrough with one of the major labels (UMG) on a long-term streaming royalties deal.  They found a fairly creative work-around to the issue of listeners free-riding on the “freemium” side, by agreeing to restrict some new releases to just the paid side for an exclusive window.  This is an attempt to incentive listeners to buy a subscription, and also allow labels limit which new music is accessed on the free side.  I would expect the other two major labels to sign similar agreements moving forward, as they all seem to move in a pack on these things.  Then it will be IPO judgment day for Spotify.  Industry analysts expect them to attempt an IPO in the back half of 2017, once the label deals are solidified.  But their last round of VC funding was valued at almost $12B, which seems way high compared to similar valuations in the industry.  So will they price the IPO at a loss and leave their recent investors high and dry, or stay private?

MAKING WAVES IN THE “SAFE HARBOR”:  Despite streaming royalties growth for the US Music Industry during 2016, there’s still one thorn in RIAA’s side.  It’s the issue of YouTube’s “Safe Harbor” royalties loophole which allows any user uploaded content platform to pay much less than the pay-per-play streamers.  Music Ally goes in depth with two articles on this issue.  The first link explains how Safe Harbor royalties work, and the second link covers the RIAA’s estimation that Google is short-paying the music industry approximately $1B a year in royalties.  The basis for the number comes from a non-profit research group called the Phoenix Center, but details on the group itself and how the study was funded are a little murky.  Regardless, it’s good quantitative headline for the music industry to throw around as they try to eliminate the Safe Harbor loophole.

Have a great Wednesday guys!

245 thoughts on “Wildcard Wednesday . . .

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