Updated at 1pm PST with quote from Pandora founder Tim Westergren below. Updated August 4th with comment from Clear Channel PR.
Streaming music service Pandora has entered into an ad sales partnership with a subsidiary of media conglomerate Clear Channel, a move that should help ensure the service's long-term financial viability but will likely lead to more ads in the stream and criticism of the independent company for getting in bed with the widely disliked mega-firm.
AdAge provided in-depth coverage of the partnership in a report this morning. A zoom out to look at the criticism that Clear Channel has faced and how this impacts music fans is worthwhile as well.
Criticisms of Clear Channel
Clear Channels' alleged monopolistic practices have long been criticized in a variety of related industries, including billboards, concert venues and radio stations. The company's image as a faceless corporate bureaucracy dangerous to the well being of local communities is well illustrated by anecdotes like the following, from Project Censored's most under-discussed stories of 2004 collection:
"In January 2002, a train carrying 10,000 gallons of anhydrous ammonia derailed in the town of Minot, causing a spill and a toxic cloud. Authorities attempted to warn the residents of Minot to stay indoors and to avoid the spill. But when the authorities called six of the seven radio stations in Minot to issue the warning, no one answered the phones. As it turned out, Clear Channel owned all six of the stations and none of the station's personnel were available at the time. "
The company's extensive ownership of radio stations has also raised concerns about censorship. After September 11th, 2001 the company famously circulated a list of songs to all its stations that it said should only be played after great thought, including Tom Petty's "Free Fallin'," Louis Armstrong's "What a Wonderful World" and the entire Rage Against the Machine discography.
Those are but a few of the many criticisms of Clear Channel. Some users will no doubt be concerned that the same culture will now influence Pandora. That deal will only concern ad sales, the company says, but it's hard to believe the money connection won't have at least subtle consequences in other parts of the business.
Helping Pandora Thrive
Streaming music recommendation service Pandora is wildly popular but has been unsure about its own survival for some time because of the high licensing fees it has been forced by the music industry to pay. Last month the situation appeared to have been resolved, though not without controversy.
The new deal with Clear Channel will no doubt make it more likely that Pandora can survive and thrive. It will presumably also mean that there will be more ads in the music stream. The company's ad-free desktop music player does not appear to be selling well, though appearances could be deceiving. We've requested comment from Pandora and will update this post when we hear from them.
In the meantime, it's a situation that many music fans will have complicated feelings about. "It's a conundrum," prominent music industry blogger Dave Allen told us by phone this morning. "I'm a big believer in being able to access anything from the cloud, but it still seems early days. Clear Channel, though, that's a tough one for indie music fans to swallow."
Update: Pandora founder Tim Westergren emailed us the following response:
The deal is with [Clear Channel subsidiary] Katz, not Clear Channel. It's really most akin to an ad network deal (think DoubleClick for audio). It has no bearing on a relationship with Clear Channel (just as using DoubleClick has no implications for a relationship with Google), and will have no impact on our longstanding audio ad strategy - which will continue to be short, tasteful and infrequent. It just allows us to take advantage of an established network of sales folks as we ramp our team to keep up with the growth.
We'll leave it to readers to decide whether they buy that.
Update: A PR representative from Clear Channel emailed the following response to this post as well.
With regards to the situation in Minot, the public-notification failures connected with the Minot train derailment were a direct result of the local authorities' failure to install their Emergency Alert System equipment. Instead of using the equipment - which would have allowed authorities to automatically break into the broadcast - as specified by the Emergency Alert System and as successfully done locally by the National Weather service MANY times - the local authorities attempted to use phone lines that were jammed with citizens. That is why the government abandoned the phone-based emergency "broadcast" system seven (7) years before the Minot incident happened. When the truth finally came to light, the local authorities privately apologized to local Clear Channel managers for lying to the media and Congress about the incident -- a subsequent Congressional inquiry confirmed that local authorities were at fault that night and that Clear Channel Radio employees went above and beyond their professional responsibilities in responding to this serious situation, during and after the incident occurred.
Additionally, Clear Channel does not ban songs - and the company has third-party spins data to prove it. There is no truth to that rumor - there was no list issued by the company after 9/11. An email from a local programmer who had just lost his son was sent to a couple of his colleagues who were programming similar formats describing his personal experience with his overwhelming grief. It was not an official list distributed by the company - in no way, shape or form.