8tracks: Playlists With a Purpose

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July 28 (Bloomberg) -- David Porter, founder and CEO of 8tracks, discusses the latest trends in the streaming music industry with Cory Johnson on "Taking Stock." (Source: Bloomberg)

I am cory johnson, and for pimm fox.

Amazon, microsoft -- itunes.

Tinkering to offer music online.

Early this month, google announced it was purchasing songs for media for 39 million bucks.

Let's bring in the ceo of 8tracks.

We were probably on the same plane yesterday.

What is going on with the user industry?

It is so dramatic to me the changes that have been brought in the way that music is delivered.

It has been a shift historically from final two -- vinyal to his sets to online.

We have seen the numbers we go for spotify and so on.

To me, they are not knock your socks off.

They are good, but not incredible.

You think about the world of streaming in two buckets.

There is on-demand streaming, best exemplified by spotify.

And then there is the streaming best example by by pandora.

There streaming hours were opened by a third, which was pretty significant.

I want to get to you and talk about how this works -- pandora, when they became public, we saw a lot that we had not seen before and the company is been around for a long time.

There was a lot of fascinating things in that ipo filing.

The most notorious big p was their desire to lower the royalty rates.

What is going on with realty rates?

The royalty rates are set by a compulsory license for webcasting, so effectively by u.s. law.

That is the default license that is set for how they structure like radio.

The thought is if it is promotional for music sale and not cannibalistic of music sales, it deserves to have a slightly lower royalty rate.

I never thought about that.

That is why you have i hear t radio where you have a pile of songs.

And spotify, the royalty rates are higher because that is a substitute for owning the music.

What is different about 8tracks is it is a cure ration platform, so any person or entity around the world -- what i mean by that him practice them a 1% of our users can upload music from their hard drive, create an online mixed it, add metadata in terms of a title, cover art, a description, classified by genre, mood, activity, and then the listeners tune into a series of online mixed tapes, ethically choosing a tag.

How does this differ from a playlist on spotify?

There is an important difference.

Fundamentally because spotify is an on-demand service, the way people typically use playlist thing is for direct personal consumption.

Oh, there is an album that came out last week and i heard a song from the 80's yesterday.

I am going to put that in a playlist and listen to that this afternoon.

With 8tracks, it is different because it is intended for an audience.

It is not for personal consumption.

How does this work with an advertising base?

Advertising is a bigger market.

Advertising question mark advertising associated with radio.

Versus what you might see on a website.

Or your device.

The total market is about through -- 33 billion dollars globally.

If you get 10% of that, you will be fine.

That is reportedly what pandora has today.

Reports are they are up to 9% of the u.s. market.

Pandora is still ahead by a large margin.

Where is adoption happening or where is it not?

Obviously the car is the holy grail for music listening in the u.s. that is true and we have seen that.

Two years ago at this time, two thirds of our streaming came on web or desk top.

Now it is about two thirds mobile.

Wow, in 2 years that changed?

Probably a much bigger business, too.

It is growing pretty dramatically as well.

That's right.

The challenge of course, the -- the ad rate question example exactly.

-- the ad rate?

Exactly par -- that's right.

This text has been automatically generated. It may not be 100% accurate.

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