For the last two years, Pandora has been nursing a PR headache. Ever since the Internet radio company’s efforts to scale back royalty payments to artists resulted in an onslaught of criticism back in 2013, Pandora has been trying to placate musicians. Its latest effort seems to rely on big data to help smooth things over.
Today, Pandora announced its acquisition of Next Big Sound, an artist analytics platform that gives musicians a high-level view of how their music is being consumed and talked about online. This, combined with Pandora’s huge existing set of Music Genome data, gives the company a serious advantage as it tries to assuage artists’ anxieties about how the ever-evolving streaming music business will affect their livelihoods.
Next Big Sound (one of our Most Innovative Companies of 2015) ingests data from all over the web: Bandcamp, SoundCloud, Rdio, Twitter, YouTube, you name it. It generates insights about both music playback and social chatter and boils them down into data points and viewer-friendly charts to give artists a look at the health of their online presence. These charts show metrics like an artist’s reach and engagement and the demographic breakdown of his or her listeners, then drills down into the weeds with data about how specific songs are trending on YouTube, SoundCloud, Twitter, and the like.
Pandora isn’t the first company to recognize the value of what this New York-based startup has been working on. Next Big Sound is used by Billboard to power its Social 50 online music chart, which analyzes artists’ popularity on social channels like Twitter and YouTube.
The acquisition announcement comes about seven months after Pandora launched its own artist analytics dashboard called the Artist Marketing Platform (AMP). That gives musicians a peek at how fans are engaging with their music on Pandora, specifically: how many radio stations are being created with their songs, how many of their tracks are getting played together, and that sort of thing. With Next Big Sound under its corporate wing, Pandora can now expand its analytical insight to the web at large, making it an even more invaluable resource to artists.
In the summer of 2013, Pandora faced some backlash from some prominent artists, who objected to the company’s ongoing efforts to have its artist royalty payments reduced. From Pandora’s vantage point, the hefty licensing costs it must pay to songwriters and artists are an unfair burden compared to its legacy competitors in terrestrial radio, who don’t pay such royalties. Pandora tried to have this royalty scheme altered in 2012 via legislation in the U.S. Senate, and undertook a big lobbying effort to try and get it enacted. That legislation failed, and some artists struck back with a loud, compelling message: Pandora is trying to screw us. Now it seems that the company is hoping musicians will accept data in lieu of the money they’re not raking in from streaming services.
Data is only going to get more critical to the new music industry, especially as entrenched and data-wealthy giants like Google and Apple become bigger players in the streaming music market. Recognizing this, Spotify acquired music intelligence platform The Echo Nest for a reported $100 million last March. Similar to Next Big Sound (although using decidedly different methods), The Echo Nest takes a web-wide look at artists, genres, and associated language to try and train machines to better understand music and its nuances, a more automated version of what Pandora does with its Music Genome Project.
To date, neither Spotify nor Apple’s iTunes Radio has had any discernible impact on Pandora’s market share–but the competition continues to ramp up, putting Pandora in a vulnerable position. If anything will keep hungry artists at bay while the new music economy figures itself out, Pandora is betting that data is it.