This week in etilities, Google continues to make headlines, this time with Chrome OS, and Pandora is given a chance to prosper.

Pandora heaves a sigh of relief

We wrote almost a year ago about Pandora being in a tough situation with regards to the outrageously high royalties it has to pay to broadcast music over the web, especially compared to traditional radio. It was bad enough that it was basically impossible for the internet radio provider to turn a profit. We can only imagine their relief this week as an agreement on the issue was finally reached. In the words of Pandora’s founder Tim Westergren: “the royalty crisis is over! Webcasters, artists, and record labels have reached a resolution to the calamitous Internet radio royalty ruling of 2007. Pandora is finally on safe ground with a long-term agreement for survivable royalty rates.”

It didn’t take long for investors to pounce on the occasion. Pandora has already secured $35 million in new funding since the announcement, and it is expected to become profitable very soon.

Google announces Chrome OS

It was hard to miss Google’s announcement of Chrome OS this week, and most of the tech media has talked of little else since. The important takeaway here is that the age of the browser-as-OS will soon be upon us. Very soon. The very fact that Google is naming the OS after its browser coupled with its target market (netbooks) means that you can expect an OS built around the browser, for the browser and with little else in it.

There have been other recent developments in the industry that have shown that we’re about to turn a corner and make the browser the only truly relevant “software product” (aka not in the cloud): Mozilla is adding multiprocess support to Firefox, and Silverlight is working on utilizing your GPU (graphics card) for better HD streaming. This is a clear trend of browsers (and their extensions) becoming more and more like operating systems and the line between the two slowly fading to the point where it will soon no longer exist.

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Pandora (Etilities Forum), the popular internet radio service, has been struggling for some time with profitability issues. One of its biggest challenges is that it pays higher royalties than broadcast and satellite radio and therefore has to work harder than a lot of its competition just to stay afloat. Thus far, most of its revenue has come from visual ads next to the playlist. But typically, when you listen to music, it is playing in the background while you browse other pages, so it is likely that Pandora gets fewer ad clicks than your typical site.

In order to work around this problem, Pandora has started playing 15 second audio ad segments throughout its playlists. These are, for now, only airing every 10 to 20 songs, which comes out to every one to two hours provided you don’t do too much skipping. While this will no doubt be a turn-off for many users, 15 seconds of commercials every two hours most certainly beats any radio station, and given that you are still getting personalized stations that let you pause and skip tracks, it’s easy to see that you’re still getting a pretty good deal.

If you don’t want any ads whatsoever, Pandora has been offering a subscription service for $36 a year ($3/month). However, the fact that they are still investigating other avenues for generating revenue suggests that not many are signing up for it, which is of course the core of the problem: we always want all of the content in the world, playable anywhere, anytime, for free and without ever being hassled with ads. No wonder it’s tough to make a living trying to meet those expectations…

©2008-2009, Gallop Services, Inc. All rights reserved.

Which technology services made a significant, positive impact on you as an individual in 2008? Which most impacted the market as you see it? We performed an in-depth evaluation of the services we covered this year and combined it with your feedback to compile a list of the cream of the crop.

Vonage: VoIP has taken the market by storm. Switching to Vonage (Etilities Forum) can result in amazing monthly cost savings, and the provider shines amidst the competition thanks its features, price and reliability.

Netflix: Implementing the first mainstream DVD-by-mail model was impressive enough, but Netflix (Etilities Forum) did not rest on its deserved laurels.  It is constantly working on new ways to deliver content to your TV set – as well as the other screens in your home.  It has formed an impressive number of partnerships this year to to improve their video-on-demand offerings.

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©2008-2009, Gallop Services, Inc. All rights reserved.

As we’ve previously discussed, Netflix (Etilities Forum) has been investing a lot of time and money into its online streaming offering.  In a further development, it announced yesterday a partnership with Samsung to include its streaming service in the electronic giant’s Blu-ray disc players.  Netflix currently has 12,000 movies and TV episodes available in its online library.  The Samsung models that will include this feature are the BD-P2500 and BD-P2550, both in the $400-$500 price range.  If you already own one, you will be eligible for a free firmware upgrade to your player.  The partners stated that they intend to expand this offering to a wider selection of Samsung products.

If our article on internet radio piqued your interest, you will be happy to know that the BP-P2550 can also play content from Pandora after you’ve upgraded the firmware.  This is in line with the trend we observed that the boundaries of content delivery products are eroding.  Your existing hardware is becoming increasingly versatile and the dollars you put into entertainment subscriptions are going farther.

©2008-2009, Gallop Services, Inc. All rights reserved.