This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Meaning Behind Pandora's Brilliant Legal Maneuver

NEW YORK ( TheStreet) -- Pandora (P - Get Report) bought a FM radio station in Rapid City, S.D.

I'm not joking.

It's an absolutely brilliant legal move in (one of) the fight(s) over music royalties that just got a little more confusing. Billboard does an excellent job explaining the ins and outs of what we know so far. I'll hold comment on the legal aspects until a motion Pandora filed Tuesday in association with a complaint from November against ASCAP becomes public in about a week. Plus, I want to talk to a few people in the know.

For now, let's look at other important components of the radio station purchase.

Consider the last paragraph of an op-ed piece Christopher Harrison, Pandora's Assistant General Counsel, wrote for The Hill:

Certain powerful music incumbents see Internet radio as a threat to the status quo. We see Pandora, and Internet radio, as a transformative way to connect listeners with music they love. Every day we introduce artists to scores of new listeners who can't find them on the traditional FM dial. The status quo is a dead end for the vast majority of working musicians and the Internet is driving a sea change that will fundamentally shift the equation away from big industry players toward a more democratic and inclusive industry for both listeners and artists. For this to become reality, Internet radio must be embraced -- not discriminated against.

Well-stated. And while Pandora aggressively postures by becoming owner of a broadcast radio station, it can get quite a bit more out of the move.

First, Pandora will provide the Rapid City station -- KXMZ-FM -- with local listening data (number of spins in the market, thumps up data, etc.) so programmers can personalize their station for their city. This doesn't happen in major markets such as New York and Los Angeles, let alone South Dakota.

This programming approach coalesces with Pandora's ability to execute local promotions. When KXMZ finds out which independent artists receive the most "thumbs ups," for example, it can encourage these acts to make Rapid City a tour stop. This eliminates a great deal of the anxiety working musicians experience when they hit the road. How do we bring people out to venues so something we absolutely have to do -- tour -- doesn't turn into a money-losing proposition?

Assuming Pandora takes this approach in Rapid City -- and I would be shocked (and disappointed) if it didn't -- we will be able to see the power of its fine-grain local data in action. Because, remember, Pandora plans to share streaming data with artists so they can leverage it as a promotional tool.

Second, the number of listeners Pandora has in Rapid City is astounding. In a market of roughly 107,000 people aged 12 and up (according to Arbitron), more than 42,000 residents use Pandora.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
CCMO $4.45 1.14%
AAPL $124.24 0.00%
P $15.82 0.00%
FB $83.01 0.00%
GOOG $555.17 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs