JacoBlog - Jacobs Media's Blog

Satellite Radio Logic

XM's first quarter numbers are out, and what do you know?  Its losses widened to nearly 6 percent, even though revenue is up.  For the quarter, XM hemorrhaged $129 million, and their customer acquisition costs rose to $73 a subscriber (up from $65 last year).

And this is a business that deserves to be rescued by the DOJ and FCC?  Is it just competition from other media or has XM (and Sirius) proved perhaps that over-spending on the programming side just isn't good business?  Or does it cost so much to "acquire" (or subsidize) new customers that this business model just doesn't make sense.

To make matters more surreal consider Silicon Alley Insider's Peter Kafka's statement that “XM Satellite and Sirius, stymied by regulators for more than a year in their attempt to merge, are doing their best to press their case.  XM’s latest move: Turn in yet another lousy quarter, which proves that it can’t survive as a standalone company.”

Now there's an interesting business strategy - keep losing mass quantities of money, and the government will be more encouraged to bail you out.

Or maybe consumers just don't want to pay for radio.

Work Ethic

The new Arbitron/Edison study tells us that the more things change, the more they stay the same.  It reports that online listening at-work continues to grow.

Correspondingly, listening on-the-job on a standard terrestrial radio has slipped.

Of course, Jacobs Media has been proponents of streaming from the beginning - in spite of the corporate excuses that "we won't give our station away on the Internet" or that "it costs too much" or that "we can't sell it, so why do it?"

Why stream?  Well, in 2008, it's a no-brainer, isn't it?  As new devices allow consumers to stream audio on their phones and (soon) in their cars, streaming is an essential.  And not just any stream, but a product with a strong player, great quality, and reliability.

But it goes beyond that.  The at-work component continues to play a large role in radio's overall place in the media hierarchy.  As one of the few entertainment/information sources that can co-exist with many on-the-job activities, radio remains the great companion - whether the source is a clock radio, a boom box, or an online stream.

Way back in '97, Arbitron and Edison partnered for their first groundbreaking study about at-work listening, and our consultancy was transformed in the process.  That research showed that Rockers are big consumers of the radio while they work.  As a result, we created, mobilized, and championed many promotions and contests - think Workforce - that were designed to capitalize on the opportunity.  Most of our clients are still very much engaged in at-work contesting today because it works.

And now, the wisdom of that strategy, combined with this new Arbitron/Edison study, point to continued success in PPM.  Inside their new methodology, Arbitron has clearly uncovered a listening edge for stations that have cultivated a gainfully employed audience.  Unlike the diary system, those who work - and make a nice living in the process - spend more time listening in the metered world.

Streaming and at-work - two more ingredients in radio's "secret sauce."

Stop Whining!

You think it's tough out there in radio?  Imagine the vibe at the recent leadership conference held by the American Association of Advertising Agencies (or the Four A's).  From a fun convention that used to include golf and tennis tournaments to the no-nonsense "reality bites" theme that this year's get-together featured, the tone was serious and concerned.

There was a recent New York Times article full of great sound bites that should probably be echoed at newspaper conventions, music industry conventions, and this year's NAB in Austin.

Consider these pithy quotes:

Tom Carroll, president and chief executive officer of TBWA Worldwide: "It's like driving in the fog.  You're not sure what's ahead of you, but you have to keep driving."

Ben Silverman, co-chairman at the NBC Entertainment and Universal Media Studios:  He suggested that better deals and sponsorships could happen if agencies would stop asking "Am I buying media?" and ask instead "Am I buying culture?"

And finally, Lee Clow, chairman and chief creative executive at TBWA, who exhorted the crowd to "Stop whining."  He reminded convention-goers that the new realities of the advertising world "shouldn't be scary" and should instead provide "a huge opportunity for us" to become more useful to clients as they look for new ways to sell their wares.  And then finally, this:  "If you want to participate, you've got to start hiring young people.  And don't tell them what to do -ask them what to do."

Stop Whining!

Download Mp3 File

Scenes from coming attractions, to be sure.

MyBoston

If you're looking for great examples of social networking and consumer-generated content, look no further than Boston's upcoming album and tour.  When lead singer Brad Delp died last year, the band was hard-pressed to find a replacement with his vocal range and intimate knowledge of Boston songs.

Enter Charlotte, North Carolina's Tommy DeCarlo.  You haven't heard of him?

That's because he's never been in a band, never had any groupies, never worn spandex, nor has he ever demanded that the brown M&Ms be removed.

Most days, DeCarlo wears an orange apron over at the Home Depot directing shoppers to aisle 3 to find PVC piping.

But now, he's set to replace Delp on Boston's summer's concert tour, and on the band's next album.  How did he break through?  MySpace and consumer-generated content.  He posted cover versions of Boston songs on his MySpace page, and was "discovered" by another visitor to the world's social networking site.

Boston's Tom Scholz's wife heard the tracks, and DeCarlo is now a working member of the band.  Now that's a great result of social networking on the job.

From The Email Bag

Since the release of our W.T.D.A. initiative last month, we've had some great comment responses to the concept from clients, pundits, and even a broadcaster in India.  Recently, we heard from Bob Bellin, a guy who has managed radio stations and also been involved in digital ventures.

Here's Bob's "take" on W.T.D.A. and how radio needs to approach the digital challenge/opportunity:

I couldn’t agree more about digital applications – radio needs to meet its customers where they live, work and play digitally.  The world is moving toward customized, portable stratified entertainment (all digital) yet radio often seems clueless about the details.  And that’s really going to hurt any attempt to implement the W.T.D.A. strategy.

The problem is that when the uninformed try to “get digital” their digital applications to often miss the mark.  Start with the typical radio station website, which is often nothing more than a crude station brochure combined with some photos of local servers in tank tops and bikinis.  I haven’t been on the inside in awhile, but I can almost hear the sounds of station management whining about how sales “can’t sell the website.”  If there isn’t much value, there isn’t much traffic and if there isn’t much traffic, why would there be advertiser interest?

If radio really wants to play ball in this arena, it needs to:

1) Hire people who really understand how the digitally-initiated use those products.  Restrictive, half-baked proprietary versions of what is already out there will not create any groundswell.

2) Do the hard work (research, beta testing, etc.) and find out what new ground can be broken by combining radio’s considerable programming skill, available promotional inventory, listener communities and massive cume into digital applications that provide enough user benefit to attract people in large numbers.

3) Be willing to trade off some terrestrial listenership for these digital apps.  More digital entertainment choices will slowly siphon off terrestrial radio’s audience no matter what they do – why not walk those people into another house that radio owns – (albeit a new house) rather than let other companies do it?

4) Recognize that building a digital application is as difficult and complex as building a new radio station – and that its ability to generate revenue is tied to eyes and/or ears delivered, just like terrestrial media.  Radio hasn’t learned that lesson and until they do as an industry, failure is, well, an option.  HD Radio proves my point.

5) Ask their biggest clients… and some advertisers that are big, but not radio clients, how integration of terrestrial and digital assets could work best to help them meet their marketing challenges - and build some of the key answers into the applications.

The dialogue continues, so please post any and all comments you have.  And thanks to Bob for his thoughts.