The Pandora Content Universe, Issa Rae's Hip-Hop Moves, Live Nation's Q3 Earnings

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Hey! Today's update covers Pandora's growing content strategy, Issa Rae's hip-hop moves, and Live Nation's Q3 earnings (and brief thoughts on how most earnings get reported).

Pandora Content Universe

Yesterday was Sirius XM-Pandora's Q3 earnings call. It added over 300,000 self-pay net subscribers—the best Q3 Sirius XM has had since 2016. It's been eight months since Sirius XM finalized its acquisition of Pandora. The joint company has aggressively strengthened its content game ever since.

Here's CEO Jim Meyer on yesterday's earnings call:

"Just a few short weeks ago we christened our new SiriusXM Hollywood studio complex in Los Angeles with a special series of broadcasts by Howard Stern...Howard's broadcast followed a month of special shows interviews and performances in L.A. exclusively for us by Carrie Underwood Julia Roberts and young phenom Billie Eilish to just name a few. ...Last week we announced a collaboration with Marvel to create scripted and unscripted podcasts exclusively for the SiriusXM and Pandora platforms. ...In sports, we teamed up with UNINTERRUPTED the athlete-empowered brand founded by LeBron James and Maverick Carter to create 17 Weeks a new weekly football podcast series this fall...We are also working with NFL Films to coproduce a 20-part podcast series that celebrates the NFL's 100th season...Kevin Hart expanded his relationship with us and his full-time comedy channel... We have renewed and extended high-profile SiriusXM content arrangements with FOX News Andy Cohen Pitbull and others. ..All-Star pitcher Trevor Bauer to host an exclusive show on our Major League Baseball channel. ...Taylor Swift came to our Rock Center Studios to perform songs from her new album on the day it was released performing before a live audience of delighted SiriusXM subscribers. And as I have mentioned before we are thrilled to be working with Drake in a collaboration that will stretch across both Pandora and SiriusXM."

Damn. Who doesn't Sirius XM-Pandora have a deal with? They are low key assembling a group of Avengers with this slate. Exclusive content is an understandable strategy since it's nearly impossible now to battle Spotify and Apple Music on scale.

It's a smart for several reasons, but it's not without risks. These projects, especially the Marvel and Drake projects, will attract large audiences. There may be some friction from folks who don't already use Sirius XM-Pandora regularly, but the content will be free to access so that should help. There won't be any Luminary-type issues.

For context, Luminary's challenge — and any company that wants to the "HBO of audio" is that podcasting isn't quite there yet to justify that business model sustainably. Right now, it's hard to build a true moat around paid podcasting even with big names like Guy Raz or Bill Simmons. Most of those names have tons of content available that's free for everyone. It's much easier for HBO to pull this off.

The risks though are specific to Marvel. Marvel Television always had a tough time aligning with the Marvel Cinematic Universe movies. Netflix canceled all of its Marvel shows after the Disney+ announcement. The podcasts will need to be in lockstep with the MCU to be most effective. There are plans for unscripted content, but that will also have to be done properly to attract the MCU crowd.

The Drake and Uninterrupted moves are exciting, but the most successful Drake/LeBron content usually tackles hot topics that will help it go viral. Here are some potential ones that would surely generate strong viewership:

• Drake discusses any drama from his past (Chris Brown, Rihanna, Adonis' mother, etc)
• Drake on his current relationship with Kanye West
• LeBron revisits his Hong Kong/Daryl Morey comments
• LeBron talks about his hairline and hair regiment (I'm kind of joking here, but I'm really not)

If Sirius XM - Pandora can get those moments exclusive to its platform, it will serve the company well.

Issa Rae's Rap Shit and Record Label

Looks like Issa has something in the works with HBO Max. From Deadline:

"Rae (Insecure, A Black Lady Sketch Show) looks to continue her momentum with the half-hour series Rap Sh*t, which follows a female rap group from outside Miami trying to make it in the music industry. The series will be executive produced by Rae and Montrel McKay for Issa Rae Productions, as well as Jonathan Berry (Insecure) and Dave Becky (Master of None, Russian Dolls) for 3 Arts Entertainment. Rae is writing the pilot."

Two weeks earlier, Rae launched a record label with Atlantic Records. From Billboard:

"On Friday (Oct. 18) it was announced that Raedio -- a record label recently formed by Rae -- has entered a joint venture with Atlantic Records that will kick off with today’s release of the single “Kinda Love” by Haitian-American singer-rapper TeaMarrr.

Billed as an “audio everywhere company,” Raedio will extend its influence across media by aligning its roster of talent with film and TV projects, commercials, podcasts and more, according to a press release. Rae says the label was inspired by her history of centering the work of “female, independent, or Los Angeles-based artists” like SZA, Saweetie and Jazmine Sullivan on Insecure as well as earlier projects."

If we connect the logical dots here, the rap group in Rap Shit will get signed to Raedio at some point in the show. The songs they release during the show will be featured as standalone singles available to stream everywhere. It reminds me of Gimlet Media's StartUp—the company's first podcast, which focused on the process of starting Gimlet Media. Very meta, but effective when done right.

Rae has often been ahead of the curve with her content. While Insecure might have lost some of the rawness of her Awkward Black Girl YouTube series, it is still very popular. Its fourth season will come in 2020 but would have come sooner if Rae wasn't busy with other projects.

Live Nation's Q3 Earnings Call

Live Nation had its most profitable quarter ever (again), but it missed its revenue targets. Most of that was attributed to concerts, where revenue dropped 4% from Q3 2018. Live Nation's officials tell us that it's largely a timing issue and that we shouldn't worry about it.

Here's Live Nation President Joe Berchtold on yesterday's call:

"First, Concerts. Over the combined past two quarters, which represent our core concert season, AOI was up 9% and revenue up 2% year-on-year, as we grew attendance to 73 million fans at over 26,000 shows, up 3% and 11% respectively. As we discussed on our second quarter call, timing this year somewhat shifted to Q2 versus Q3. And as a result, for the third quarter attendance was 2 million lower than last year, resulting in slightly lower revenue and AOI.

Looking at the full-season though, every indicator we have is of a robust growing business. Our September results actually came in above our expectations, as our amphitheater and arena shows closed strongly and fan spending remained at high levels."

I've always found these "quarterly shifts" interesting. Spotify said something similar on their Q2 call. It missed its subscriber projections because of a fumbled promotional offer. I do agree with the focus on "full season" instead of quarterly dissection, but this is what happens. It makes you question how often these numbers are padded when the numbers seem overly favorable.

This is not a unique challenge to the music industry. I previously worked for a Dow 30 company where newly-minted employees were asked to engage in quarterly "practices" that were driven to impact earnings of either us or our competitors. I can't share what they were on wax, but ask me about it at the next Trapital meetup and I'm happy to share!

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