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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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« No Sale | Main | The Big 3-0 »

Comments

Fred

Mike, thanks, and good points about a more public radio approach to stream sponsorship/underwriting. I know this post has made the rounds through public radio today, so it would be of value receive some comments from that community. Thanks for reading our blog and commenting.

Jim Meltzer

Gee Fred -- give the users what they want for "free," --- works for me. I also am concerned about the additional royalties. Once the content attracts enough users you could sell Mike's idea (mine too, but he posted his first.) OK, so long term it's not totally free, but a Hell of a lot better than the crap we have now.

I just wish more broadcasters looked at an investment in digital as R&D for their future!

Fred

Jim, exactly right - a step not a long-term strategy. Thanks for contributing to the conversation.

Jeff Winfield

Completely agree on creating compelling content on our streams with or without commercial advertising. But isn't it also time to look at our outdated over the air commercial model?

Dave Mason

My sides are still hurting from laughing, Fred. Since consolidation, Wall Street has run radio. Can you imagine the first GM to say "I'm killing all spots on my website"-and the reaction he'll (she'll) get from the CEO? Those $1 spots add up to-maybe $50 a day. $350 a week. Can we get to the heart of the matter first? Radio is over commercialized. I can tell you of some stations selling ON AIR spots for $5. Prime spots. Anything to fill the inventory and make the company look profitable. You're right in your suggestion -it's just that it's nearly impossible to get anyone to actually THINK they can get away with it. First of all, the problem with radio is the commercials are awful. Irrelevant most of the time. Tough to listen to. Poorly produced. Fix that first of all and make them part of the "experience". Do the same with the stream-and as you suggest - minimize the spotload. Let's get to the heart of the matter. The chance to paint a picture in the listener's mind is fleeting every second. We're blowing it big time. Pandora has an "image" of being hip, cool. Radio has an "image" of -well, sucking. You're not going to BEAT the competitor be BEING the competitor. Even if it's commercial free. You still need a USP. I do credit you with stating the idea- but our issues run much deeper than too many commercials. What really needs a fix is the whole radio "model". The on-air product should be as good as the online product. Not worse. I'm suggesting fixing the ON AIR product. Although commercial free streams ain't a bad idea.

Fred

Jeff, reinvention is never easy. Thanks for the good point, and for making a contribution to what is becoming a long list of comments.

Jordan Guagliumi

In my town, I would have a hard time opening a new coffee place that could compete with Starbucks and Dunkin' Donuts. But I could give away free coffee - that would absolutely generate some traffic to my store. But the problem is, I wouldn't have a store, beacuse I'd be out of business. Signs in my drive-thru lane (the player ads, if you will) and video ads on the menu board (preroll, if you will) won't offset my costs.

It's easy to suggest "Commercial Free" when you don't have to pay the royalties or bandwidth costs. No commercials = growing audience = higher TSL = rising costs, with no end in sight. Not a worthwile business proposition. Selling some 120x90 pixel ads and preroll impressions will NOT offset the costs, even with creative math.

However, Fred, I understand the sentiment of your post. And I am pleased to say that at Saga, we are experimenting with an approach in the middle... on a few streams, we are removing filler content and in-stream commercials. We sell the preroll and player ads, of course, and then run a solid schedule of short "stream is brought to you by _____" on both the stream and on the terrestrial signal. Getting a limited number of clients to pay for this exclusive "presenting sponsor" opportunity is valuable. We are running maybe 4x or 5x of these :15 sec announcements (think NPR) with more injected music -- instead of 10 mins of fill per hour. The jury is still out-

Jordan Guagliumi
Director of Interactive Sales
Saga Communications

Tripp Eldredge

Thanks for inspiring the discussion, Fred. I share Kurt's concern that it may not be a strong enough distinction, but, as you say, it's a good start. As a next stage, would there be an opportunity to replace the spots with some vignettes or short local lifestyle branding that connects to the passion points of the listeners? It might include connections to the Facebook or a microsite of some sort. That would fulfil the local brand promise without being simply a substitute. May even provide a more effective and valuable advertiser platform as it could engage listeners more deeply with the various touchpoints of the station brand.

Michael Bell

I didn't mean that cleaning up the streams and the blocks is more trouble than it's worth. On the contrary, it's worth whatever effort is required to make them sound better.

What I meant by scheduling is a chore is that most of the people I know that have sampled Pandora, Spotify, etc. have enjoyed the interactive for awhile, but eventually, after realizing what they need to do to keep it constantly fresh for them, they just use it as a glorified ipod shuffle.

Your idea of keeping our streams commercial/irritant free is, in my opinion, the way to go.

David Moore

As someone who spends an inordinate amount of time listening to terrestrial radio streams anything to clean them up would help. The breaks almost universally suck. Commercial-free is not enough, but it is a step in the right direction.

Fred

Dave, appreciate the comment and the reality check. And today's post - and many of the thoughtful comments that have followed - point to a lot of the same issues. There is a multitude of issues, from great content to long-term vision. Thanks again, and glad we gave you a laugh.

Fred

David Moore, thanks for the comment. Yup, it's a start.

Fred

Tripp, thanks for reading our blog and contributing. No doubt about it - better, local content in the breaks could set our streams apart - in a good way.

Chuck

Something KQRC in Kansas City is doing is having a jock "host" sixty second clips of a core artist's new album...This automatically gives you 10-15 fresh :60s that are exclusive to the stream. I think this sort of thinking is the future for radio's online stream...What sort of vignettes or content can you put inside of those breaks?

---

What do you say to stations who are actually making money on the stream instead of running PSAs or per-inquiry spots?

Fred

Jordan, thanks for the thoughtful post and some financial reality. But as I pointed out in the blog, radio has bona fide revenue streams in many places. The cost of being competitive in new distribution outlets may be the price of admission. Those towers and transmitters didn't necessarily throw off lots of cash in the early years, but they were an important means to an end. Thanks much for taking the time to provide a great counterpoint.

Fred

Chuck, lots of good thoughts & congrats to KQRC for coming up with a creative solution - going deeper on core artists. Local music - another common listener desire - might be another angle. As for stations that are making money on their streams, I would submit to you that they're in the minority. There are no one-size-fits-all solutions here. Thanks for taking the time to join in on the conversation.

Kdwilliams

Posted at All Access as well...

Your latest big idea is nothing more than shrugged defeatism.

Also, how do you answer your big "commercial free" idea when it comes to spoken word radio? Play songs and betray their formats?

Next, Pandora won't find itself in the same boat as radio concerning spots because - for one of many reasons - their spot loads aren't nowhere near as high as radio's. The Clear Channel style of playing more spots in less time hasn't really solved the problem for radio on that issue. Add to that, they're smaller than our industry. Their responsibilities, purposes and issues are not aligned with ours. Never will be.

Your point from your blog, "Rates may go up and down, but the ad world views radio as a viable marketing medium and always has." is not based in reality. It's not because we're more viable than any other medium. We're simply cheaper for the value. And don't get me started on remnants.

Another point from your blog, "For Pandora, making money with their stream is essentially their only revenue source. It’s their inventory, their bread and butter, the only viable way they can ever make good on their IPO." Well duh, that's their purpose along with covering their performance fees. It's a business built on an algorithm. Their Internet radio station started as way for them to prove the viability of that development. They don't have the overhead radio has. They don't have to worry about rent, maintenance cost, rank and file salaries and benefits, engineering costs, promotions and the other pesky things we do. For them, it's the player, apps, algorithm, license fees, legal, sales and the library. That's it.

Also, if you recall, one of the main reasons they started a revenue stream is to pay for the cost of paying performance fees. If you recall they - and a lot other Internet radio stations - were scared that would have to go under because the fees were initially so high. BTW, the NAB is trying to find a compromise so that we will be paying performance fees too. How does that figure into your "commercial free" stream?

Finally, your "As for consultants and my digital team, I'm not going to get into a debate with you over their value. The radio industry votes every day on those questions by keeping us in business, publishing our articles and think pieces, and supporting our industry events like the Conclave's Summer School and our annual Summit." is the McDonald's argument - billions of people eating here can't be wrong. However, that doesn't means it's good food and that doesn't mean your team is knowledgeable.

Further, my commentaries and responses are solely based on what you and your digital representative have proposed in this community. From the myriad of evidence that's out there, you and your team member - that post here at All Access - are wrong and too on the surface in your valuations. For example, your give up and go commercial free streaming isn't a solution.

Thanks for the feedback.Your latest big idea is nothing more than shrugged defeatism.

Also, how do you answer your big "commercial free" idea when it comes to spoken word radio? Play songs and betray their formats?

Next, Pandora won't find itself in the same boat as radio concerning spots because - for one of many reasons - their spot loads aren't nowhere near as high as radio's. The Clear Channel style of playing more spots in less time hasn't really solved the problem for radio on that issue. Add to that, they're smaller than our industry. Their responsibilities, purposes and issues are not aligned with ours. Never will be.

Your point from your blog, "Rates may go up and down, but the ad world views radio as a viable marketing medium and always has." is not based in reality. It's not because we're more viable than any other medium. We're simply cheaper for the value. And don't get me started on remnants.

Another point from your blog, "For Pandora, making money with their stream is essentially their only revenue source. It’s their inventory, their bread and butter, the only viable way they can ever make good on their IPO." Well duh, that's their purpose along with covering their performance fees. It's a business built on an algorithm. Their Internet radio station started as way for them to prove the viability of that development. They don't have the overhead radio has. They don't have to worry about rent, maintenance cost, rank and file salaries and benefits, engineering costs, promotions and the other pesky things we do. For them, it's the player, apps, algorithm, license fees, legal, sales and the library. That's it.

Also, if you recall, one of the main reasons they started a revenue stream is to pay for the cost of paying performance fees. If you recall they - and a lot other Internet radio stations - were scared that would have to go under because the fees were initially so high. BTW, the NAB is trying to find a compromise so that we will be paying performance fees too. How does that figure into your "commercial free" stream?

Finally, your "As for consultants and my digital team, I'm not going to get into a debate with you over their value. The radio industry votes every day on those questions by keeping us in business, publishing our articles and think pieces, and supporting our industry events like the Conclave's Summer School and our annual Summit." is the McDonald's argument - billions of people eating here can't be wrong. However, that doesn't means it's good food and that doesn't mean your team is knowledgeable.

Further, my commentaries and responses are solely based on what you and your digital representative have proposed in this community. From the myriad of evidence that's out there, you and your team member - that post here at All Access - are wrong and too on the surface in your valuations. For example, your give up and go commercial free streaming isn't a solution.

Thanks for the feedback.

Fred

KdWilliams, I'm not sure where to begin. From your opening comment about spoken word,you may have missed the point about where our post was coming from. Pandora (for now) is more about music than spoken word and I wrote the piece from a music perspective. Sorry if it may have come off as confusing or even contradictory to you.

We also disagree about radio's value. It IS a viable medium - not because it may not be as pricey as other media - but because it works, is rooted in local communities, and exudes personality and companionship. You either buy that or you don't.

The blog post doesn't suggest giving up. It simply suggests a strategic idea. Nothing more, nothing less.

It's obvious we don't agree on a whole lot, but there's nothing wrong with that.

Timstansky

Fred, thanks for sparking this conversation. Maybe I'm crazy or maybe it's baseball season, but couldn't help but think of this space as farm league where a media company can cultivate content and talent profitably by being hyperlocal with a viable format that might be considered boutique in broadcast radio. Hyperlocal in dollars, music, in community involvement / fundraising / volunteering, hosts with local accents, local news and issues. This grassroots concept reminds me of the locally (Boston) imfamous WCOZ album with people on "the wall" and WBCN's annual calendar. I can see a place for music and artist discovery, local flavor, revenue and an incubator for programming and sales talent. It's a calculated risk, but the rewards of growing products and people as propritetary resources could be strong competitive advantages in market revenue.

Fred

Thanks for the thoughtful comment, Tim. The stream could be a great proving ground for many different "experiments." Some would fail, but others would work. And it's a pretty cost effective sandbox. Thanks for taking the time.

HDRadioFarce (Greg in Maryland)

Why does the radio industry spend so much effort bashing Pandora and Slacker? I know, personalized radio is far better than terrestrial/HD Radio, and consumer interest is exploding in personalized services. Fred is not crazy, he's just a massive-supporter of HD Radio.

Fred

Greg (HD Radio Farce), your comment has been noted. Although my post had nothing to do with bashing Pandora not did it have anything to do with HD Radio. It was about strategic opportunities for broadcast radio vis a vis pure-play streaming.

Don

The posts here are further evidence that radio has no idea how to adapt to what amounts to a revolution. Everything I read here indicates that broadcasters are looking for an easy way to counter the threat of Pandora and other online media. Cover spot breaks with music that just happens to be the same length as your break. Have your jocks do a different hour’s show before and after their on-air show. Simulcast and sell different spots or just make them value-added.

Easy ain’t gonna get it. Programmers are going to have to forget 40 years of formatted radio and do something different, unique, compelling…something that takes some thought, research, risk and dollars. That transmitter and tower and position on the dial are losing value every day. That’s the real risk and expense.

Fred

Thanks for adding to the conversation, Don. There's no question that a re-purposed stream doesn't solve a problem. Our post wasn't designed to be a be-all-end-all solution but to offer strategic ideas about how to compete differently. Transmitters & towers may not be the whole ball of wax, but they are still a viable means of mass media communication. How broadcasters marry and integrate other platforms and how much time and resources they devote are at the heart of the challenge. Thanks again.

Crash Kelly

Ah. Good ol' common sense. Not always common practice. An easy solution for a care-free experience. Nice!

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