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Fred Jacobs is President of Jacobs Media, a media research and consulting firm. Jacobs Media clients have included CBS Radio, Premiere Radio Networks, Citadel, Greater Media, MTV Networks, Playboy, Amazon, Electronic Arts, NPR, Sylvan Learning Centers, and Taubman Malls. Learn more about the company here.

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August 2011

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Comments

Mikel Ellcessor

The Jerry Lee flap feels like link bait. If we're really playing to the puck, this is a non-issue. The consumers have already voted on the choice/ availability/ technology issue. When I think of Pandora, I don't focus so much on this particular company but what it's doing to change consumer expectation and speed adoption of mobile streaming. Much in the way Napster didn't have to endure to have its full impact felt, Pandora may not be a long-term company -- but it won't matter if their ultimate impact is the market shift.

Fred

It is a non-issue, Mikel. And we know where the puck is going. And you are dead-on about consumer expectations, mobile streaming, etc. The toothpaste is out of the tube. We better be where our listeners are.

Thanks for taking the time to read our blog & comment.

Bob Bellin

Everything Fred says is true...including the fact that there is no way to stream without losing money. In real terms, the more effective a radio station's streaming efforts, the more money they lose at it. It's a real life version of the retailer than loses $5 on every sale but makes it up in volume.

The 800 lb. gorilla in the room is the royalty rates, which pretty much force radio, if they want to acknowledge/act on Fred's salient points, to make less money than if they don't. This is a terrible choice - and I think the NAB's focus on terrestrial royalties, as opposed to streaming, reflects how out of touch radio's leaders are with their audience and how they live.

Radio's future is, I believe inexorably linked to whether they can find a way to get the music industry to agree to reasonable streaming royalties. Mike Agovino's proposal was the best I've seen in a long time, but sadly, way to rational and balanced to expect either side to take seriously, much less adopt.

Fred

The royalty fees are onerous. For many stations, streaming is a loss leader, but a necessary avenue for its content as consumers become increasingly comfortable with digital audio from computers and mobile devices. Radio's advantage is its other revenue source, something that pure-plays lack. Bob, as always, strong comments. Thanks for contributing.

Dominick Milano

Extremely well said!!

Rob Green

This is a really well articulated article, great job. I've personally been involved, and seen this already play out with CD, DVD, and other media forms. Everyone can see the change but it is difficult for the entrenched to accept and change. Once an executive at a major studio told me that he “just wants things to go back to how they used to be.” I bet there are a lot of people in radio who feel the same way. Unfortunately, as you point out, that can’t be.

One of the reasons I got involved with Abacast is because I feel that radio is in a unique position that other forms of traditional media don't enjoy. The signals are live so there are virtually no piracy issues, and the content is timely and local so it is specific to a particular market. These are assets that radio could parley into real advantages, if it can commit to investing.

Thanks again, Fred, for outlining the issues at hand and why radio should view digital as an opportunity and not a threat.


Will Baumann

I'm a former GSM and trainer of radio reps. I've transitioned the radio industry and now sit on the other side of the desk. In addition to my real job (I'm a headhunter) I'm also responsible for allocating advertising dollars for a variety of my company's programs and projects.

I've got to tell you all--it's not an easy job. I lose sleep over my decisions, because my crystal ball is besmirched with the fog of doubt. Should I spend more on PPC? TV? Radio? Outdoor? Who's numbers should I actually believe--or should I simply buy from the rep I like best?

I believe our target demo spends more time streaming than listening to terrestrial radio. Note that I said "believe". They may catch a drive-time slot and I have five or six strong stations to choose from in this market. I do know that many of them stream at work. What they stream--I have no idea; I suspect Pandora is a big draw but I'll give the local classic rock station a fair shake.

I'm just one small pot of money in a sea of many, but for what it's worth, the availability of online streaming is definitely a key component to my decision-making process.

Tom

I hope I'm not unfairly cherry picking to point out the flaws in your reasoning, but your business logic (revenue side anyway), is not compelling:

"To not provide great radio content on these devices is to simply walk away from listening – and revenue opportunities."

"It is frankly still too early on the digital revenue curve to know precisely where it’s all going to end up."

"If we build it, the audience – and the revenue – will surely come."

I'll even grant you that the audience will come. That doesn't guarantee that advertisers will come or that they will be willing to pay rates sufficient to cover costs and realize a profit. Advertisers have many, many options these days. More than they really need, actually.

danapop

My station (a 1 kW Daytimer in Philly) has between 1000 and 1400 streaming listeners during drive times and mid days. We know this because our streaming provider tracks listeners. Most are local-and within our listening area. This tells us that some are probably listening at work on their computers and/or phones. Right now our stream is not PPM encoded-something that we will soon change. What if even one or two of those Internet listeners have a PPM? That could easily DOUBLE our ratings.

Fred

No question that streaming allows stations like yours the chance to level the playing field. Thanks for writing & contributing.

Fred

Tom, thanks for the comments & on our blog, your opinion is valid provided that you express it respectfully - as you did.

I'm saying that in the digital space, stations need to relax the revenue demands in order to understand that consumer habits are changing. Streaming may never be wildly profitable, but if that's how a portion of consumers access us, don't we want to optimize our content and be where they are?

Thanks for the comment.

Fred

Will, I feel your pain. And I agree that in the end, streaming will be a major part of the entertainment and information mix.

A reason why we do design and conduct our annual Techsurveys is to help broadcasters better prioritize their digital expenditures and the way they deploy their dollars.

If you have a database, you have a research pool. There are ways to determine audience tastes, desires, and usage patterns.

Thanks for taking the time to read our blog and to comment in this space.

Fred

Rob, thanks for the thoughtful comments. I also am enjoying this time as Jacobs Media is in a wonderful position to help our clients make that transition and achieve success in this rapidly changing world.

More audience engagement, additional platforms for our content, and more options make it possible for radio to better serve its various constituencies - the audience, the advertisers, and our communities. It is truly a great time to be alive and in media.

Thanks again.

Greg Smith (Maryland)

Deep in our hearts, we all know why some want to kill/abandon streaming - HD Radio. Those with their hands in Struble's pockets want to kill streaming. Simple. The exception might be CCU's very successful iheartradio.com. Go figure?

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